VZCZCXYZ0000
OO RUEHWEB

DE RUEHSJ #0034/01 0211903
ZNR UUUUU ZZH
O 211903Z JAN 09 ZDK
FM AMEMBASSY SAN JOSE
TO RUEHC/SECSTATE WASHDC IMMEDIATE 0424
INFO RUEHZA/WHA CENTRAL AMERICAN COLLECTIVE

UNCLAS SAN JOSE 000034 
 
SIPDIS 
TREASURY FOR SSENICH AND DO/JMACLAUGHLIN, USDOC FOR ITA/JKOZLOWICKI 
USTR FOR JKALLMER, OPIC FOR RO'SULLIVAN 
 
E.O. 12958 
TAGS: EINV EFIN ETRD ELAB KTDB PGOV
SUBJECT: 2009 INVESTMENT CLIMATE STATEMENT - COSTA RICA 
 
REF: A) 08 SECSTATE 123907 B) 08 SAN JOSE 37 
 
¶1. Costa Rica's investment climate is generally favorable and has 
been for many years.  Consequently, foreign direct investment is 
high and has been a significant contributor to Costa Rica's economic 
growth.  Nevertheless, the country continues to present stumbling 
blocks to investors.  The January 1, 2009 entry-into-force of 
CAFTA-DR in Costa Rica unambiguously improves Costa Rica's 
investment climate.  In response to Ref A, Post prepared the 
following report: 
------------------------------ 
Openness to Foreign Investment 
------------------------------ 
¶2. Costa Rica actively courts foreign direct investment.  The 
four-year administration of President Oscar Arias, (which will end 
in May 2010), places a high priority on attracting and retaining 
high-quality foreign investment in Costa Rica.  The Foreign Trade 
Promotion Corporation (PROCOMER) as well as the Costa Rican 
Investment and Development Board (CINDE) lead Costa Rica's 
investment promotion efforts.  Investment in Industry has been the 
single largest category of FDI in recent years.  However, the 
sectors of Real Estate and Tourism have grown tremendously and, in 
combination, surpassed Industry in 2007. (See "Foreign Direct 
Investment Statistics" below.) 
¶3. Costa Rica, together with El Salvador, Guatemala, Honduras, 
Nicaragua, and the Dominican Republic, is a signatory to the U.S. - 
Central America - Dominican Republic Free Trade Agreement 
(CAFTA-DR).  Costa Rica is the last country for which the treaty 
entered into force (EIF), on January 1 2009.  Costa Rica spent the 
previous two years meeting a series of legal and implementation 
requirements for EIF, and during the first part of 2009 is expected 
to fully implement the remaining measures.  CAFTA-DR improves Costa 
Rica's investment climate by strengthening the protection of 
intellectual property rights, providing a mechanism for arbitration, 
opening key sectors to competition, and assuring access to markets 
in other CAFTA-DR economies.  With CAFTA-DR successfully concluded, 
Arias administration trade policy is now focused on the negotiation 
of similar agreements, most notably with the European Community and 
China. 
¶4. State enterprises have enjoyed monopolies in the sectors of 
wireless and data telecommunications and insurance; however, 
CAFTA-DR opens these specific sectors up to market competition.  On 
the telecommunications side, the newly formed telecommunications 
regulation board "SUTEL" was constituted in late 2008 and is 
expected to initiate operations during the first part of 2009. 
Semi-official pronouncements indicate late 2009 or early 2010 as the 
likely launch date for one or more cellular phone competitors to the 
state monopoly "National Electrical (and telecommunications) 
Institute" ("ICE").  Satellite television and new internet service 
providers will most likely enter the market during 2009.  Unlike 
wireless, internet, and server services, fixed-line 
telecommunications as well as energy generation and distribution 
remain firmly in the control of state enterprises.  On the insurance 
side, alternatives to products offered by the state monopoly 
"National Insurance Institute" ("INS") should be available by early 
¶2009.  Press reports indicate interest from other, non-Costa Rican, 
insurance companies, while INS is attempting to consolidate its 
position as market leader.  Transport infrastructure (airports, 
ports, roads) is likewise controlled by the state, although attempts 
are underway to cede concessions to private operators in select 
cases.  Petroleum imports are monopolized by the state petroleum 
company "RECOPE".  Beyond these sectors, the country has a generally 
open international trade and investment regime. 
¶5. The country's commercial code details all business requirements 
necessary to operate in Costa Rica. The laws of public 
administration and public finance contain most requirements for 
contracting with the state. All businesses must be registered in the 
national registry, thereby becoming national companies that may have 
national or foreign owners. The investment requirements for foreign 
and national persons and companies are identical. Businesses may be 
established starting from nothing, acquired, merged with, or taken 
over in much the same way as is done in the U.S. Foreign 
partnerships with local businesses are quite common. 
¶6. The judicial system generally upholds contracts, but caution 
should be exercised when making investments in sectors reserved or 
protected by the constitution or by laws for public operation. 
Investments in state-protected sectors under concession mechanisms 
can be especially complex due to regular challenges in the 
constitutional court of contracts permitting private participation 
in state enterprise activities.  Furthermore, independent government 
agencies can issue permits or requirements that may contradict the 
decisions of other independent agencies, causing significant project 
delays. 
¶7. The Arias administration is moving ahead with efforts to build 
infrastructure and manage public works projects by using the 1998 
concessions law, modified in June of 2008.  The timing of that 
action, during the busy CAFTA-DR legislative agenda, is indicative 
of the high priority that the Arias Administration places on the 
concessions process.  Two concession agreements are currently 
functioning.  Operations at the Port of Caldera, the country's 
principal Pacific port, began successfully in the latter half of 
¶2006.   The other concession agreement is for the San 
Jose-to-Caldera highway.  After literally decades of delays, the 
Ministry of Public Transit is now managing major construction along 
the highway right-of way.  The recent modifications to the 
concessions law were designed to streamline related processes. 
¶8. Investors must exercise "caveat emptor," as with any business 
transaction, since many firms operate in the informal sector of the 
economy.  Appropriate due diligence should confirm a company's 
registry and formal participation in the Costa Rican economy such as 
paying taxes. 
¶9. While the government focuses on promoting foreign investment in 
export industries, foreign franchises have prospered in the domestic 
market over the past thirty years.  Both foreigners and nationals 
have invested in bringing U.S. brands from a wide array of business 
sectors to Costa Rica, including fast food (such as Taco Bell, 
Kentucky Fried Chicken, Pizza Hut, Domino's Pizza, Papa John's 
Pizza, McDonald's, Burger King, Wendy's, Subway, Quiznos and TCBY 
Yogurt), car rentals (including Hertz, Avis, Dollar, and Budget), 
hotels (such as Marriott, Doubletree by Hilton, Intercontinental, 
Regents, Hampton Inn, and Best Western), and designer clothing 
boutiques (including Tommy Hilfiger, Liz Claiborne, and athletic 
wear brands such as New Balance).  Price Smart (owned and managed by 
the founders of Price Club in the U.S.) has opened four Costa Rican 
stores since mid-1999.  Wal-Mart Central America acquired a 
controlling share in a local grocery-store holding company in 2006 
which operates 146 stores under the Pali, Maxibodegas, Mas x Menos, 
and Hipermas brands. 
-------------------------------- 
Conversion and Transfer Policies 
-------------------------------- 
¶10. There are no restrictions on receiving, holding or transferring 
foreign exchange. There are no delays for foreign exchange, which is 
readily available at market clearing rates and readily transferable 
through the banking system.  From 1983 until 2006, Costa Rica 
maintained a crawling peg exchange regime with the U.S. dollar. 
However, in October 2006, the country transitioned to a crawling 
band regime which is in reality a "dirty float" with explicit upper 
and lower limits.  To date, the result appears to be satisfactory to 
the Central Bank, but market participants have been struggling to 
adapt to the greater uncertainty.  A variety of instruments designed 
to insure against exchange rate volatility are under development and 
may be obtained through the Securities Exchange ("Bolsa de Valores") 
or through banks.  Dollar bonds and other dollar instruments may be 
traded legally.  No restrictions are imposed on reinvestments or on 
the repatriation of earnings, royalties, or capital except when 
these rights are otherwise stipulated in contractual agreements with 
the government of Costa Rica.  Royalties are taxed in accordance 
with Title IV of the Income Tax Law, No. 7092, extensively reformed 
in October 1988, at rates varying from 10 to 25 percent. 
 
------------------------------ 
Expropriation and Compensation 
------------------------------ 
¶11. Expropriation of private land by the government without prompt 
or adequate compensation has hurt some Costa Rican and foreign 
investors in the past.  These incidents usually involved land 
expropriated to create national parks, indigenous reserves, or 
agricultural projects for poor farmers.  One long-standing case 
required over fourteen years to wind its way through the Costa Rican 
court system, only to conclude without providing compensation to the 
aggrieved U.S. citizen landowner.  Another case involving titled 
beach land subject to an expropriation order for a National Park has 
highlighted differences of opinion (and conflicting decisions) 
between different government entities, and the pitfalls experienced 
when law clashes with reality. 
¶12. Article 45 of Costa Rica's constitution stipulates that no 
property can be expropriated from a Costa Rican or foreigner without 
prior payment and demonstrable proof of public interest.  The 1995 
Law 7495 on expropriations further stipulates that expropriations 
can take place only after full and prior payment is made. 
Foreigners and Costa Ricans are supposed to receive equal treatment. 
 Provisions include: (a) return of the property to the original 
owner if it is not used for the intended purpose within ten years 
or, if the owner was compensated, right of first refusal to 
repurchase the property back at its current value; (b) a requirement 
that the expropriating institution complete registration of the 
property within six months; (c) a one-month period during which the 
tax office must appraise the affected property; (d) a requirement 
that the tax office itemize crops, buildings, rental income, 
commercial rights, mineral exploitation rights, and other goods and 
rights, separately and in addition to the value of the land itself; 
and (e) provisions providing for both local and international 
arbitration in the event of a dispute. The expropriations law was 
amended in 1998 and then again in 2008 to expedite some procedures, 
particularly those necessary for acquiring land for the construction 
of new roads. 
¶13. Invasion and occupation of private property by squatters, who 
are often organized and sometimes violent, occurs in Costa Rica. 
The squatters seek to take advantage of adverse possession devices 
in laws permitting occupant to receive title to unused farmland. 
Under Cost Rica's legal system, squatters enjoy a minimum leel of 
legal protection after occupying a parcel f unimproved land after 
three months.  If a landoner has failed to take action to evict 
squattersafter ten years of occupation, the squatters can fle a 
legal claim and be recognized as the lawfulowners of the land.  The 
Costa Rican police and udicial system have at times failed to deter 
or t peacefully resolve such invasions.  It is not uncmmon for 
squatters to return to the parcels of lnd from which they have been 
evicted, requiring xpensive and potentially dangerous vigilance 
ove the land. 
------------------ 
Dispute Settlement 
------------------ 
¶14. Costa Rica uses the Roan civil law system rather than common 
law.  Thejury system is not used, although judicial reform fforts 
have included testing the use of juries i some cases.  The 
fundamental law is the country's political constitution of 1949, 
which grants th unicameral legislature a particularly strong role 
The civil and commercial codes govern commercial transactions.  The 
courts are independent, and their authority is respected.  The roles 
of public prosecutor and government attorney are distinct: the 
public prosecutor or Attorney General ("Fiscal General") operates a 
semi-autonomous department within the Judicial branch while the 
government attorney or Procurator General ("Procurador General") 
pertains to the executive branch.  Judgments of foreign courts are 
generally accepted and enforced.  The Constitution specifically 
prohibits discriminatory treatment of foreign nationals. 
¶15. Monetary judgments are usually made in Costa Rican colones. 
However, if the dispute involves a dollar-denominated transaction, 
the award may first be calculated in dollars and then converted to 
colones for payment. 
¶16. Litigation can be long and costly.  The legal system is 
significantly backlogged, and civil suits take over five years on 
average from start to finish. Some U.S. firms and citizens have 
satisfactorily resolved their cases through the courts, while others 
have seen proceedings drawn out over a decade without a final 
ruling.  The process to resolve squatter cases through the courts 
can be especially cumbersome.  The legal owner of land can be at a 
disadvantage in a system that has recognized adverse possession 
rights acquired by squatters, especially when the disputed land is 
rural and is not being actively worked.  Also, civil archives 
recording land title are at times incomplete or contradictory. 
Potential buyers should retain experienced legal counsel and 
carefully conduct due diligence to ensure that properties are free 
of conflicting ownership claims. 
¶17. Arbitration is theoretically possible under the civil and 
commercial codes.  However, U.S. investors have experienced mixed 
results from such proceedings organized by local attorneys.  A 1998 
law governing alternative conflict resolution (Law 7727) sought to 
encourage arbitration and simplify the procedures under which 
arbitration takes place.  Several arbitration centers have since 
been established, including one at the Costa Rican - American 
Chamber of Commerce.  A few cases reportedly have been successfully 
and quickly resolved under the new law. 
 
¶18. Costa Rica has been a member of the International Center for the 
Settlement of Investment Disputes (ICSID) since 1993, when it 
acceded to the Washington Convention.  Since then, the ICSID has 
successfully resolved one land expropriation case.  Costa Rica is 
also a member of the World Bank Multilateral Investment Guarantee 
Agency (MIGA), which provides a forum for international arbitration 
in investment disputes, as well as investment guarantees.  Private 
energy producers have included international arbitration clauses in 
their contracts.  Costa Rica has not joined the United Nations 
Protocol for the Compulsory Settlement of Disputes between 
Countries. 
¶19. The provisions of Chapter 10 of CAFTA-DR provide an additional 
avenue for aggrieved investors to pursue international arbitration. 
The arbitration process under CAFTA-DR is designed to be open and 
transparent; hearings and documents are public, and amicus curiae 
submissions are expressly authorized.  The CAFTA investment chapter 
includes checks to help assure that investors do not abuse the 
arbitration process.  The agreement includes a provision that allows 
tribunals to dismiss frivolous claims and award attorney's fees and 
filing costs. 
¶20. The Costa Rican bankruptcy law, addressed in both the commercial 
code and the civil procedures code, is similar to corresponding U.S. 
law.  Title V of the civil procedure code outlines creditors' rights 
and the processes available to register outstanding credits, 
administer the liquidation of the bankrupt company's assets, and pay 
creditors according to their preferential status.  Compared to other 
countries in the region, Costa Rican bankruptcy laws are less 
flexible, and affected creditors recover proportionally less from 
judgments, according to World Bank analysis. 
--------------------------------------- 
Performance Requirements and Incentives 
--------------------------------------- 
¶21. Three investment incentive programs operate in Costa Rica: the 
free trade zone system, a so-called active finishing regime, and a 
duty drawback procedure.  These incentives are available equally to 
foreign and domestic investors.  These incentives include tax 
holidays, free or subsidized infrastructure and industrial parks, 
and training of specialized labor force. 
¶22. The export processing law of 1981 established publicly- operated 
free trade zone (FTZ) industrial parks in Santa Rosa (Puntarenas) on 
the Pacific Coast, and Moin (Limon) on the Caribbean seaboard. 
Subsequently, the law 7638 of October 30, 1996; law 7467 of December 
20, 1994; and law 7830 of September 22, 1998 established the current 
FTZ regime as practiced in the country.  Individual companies are 
able to create industrial parks that qualify for a Free Trade Zone 
status by meeting specific criteria and applying for such status 
with Costa Rica's Foreign Trade Promotion Authority (PROCOMER). 
Presently, there are nearly two hundred fifty companies operating 
within twenty-eight FTZs within Costa Rica. Companies in FTZs 
receive exemption from virtually all taxes for eight years and at a 
reduced rate following that period.  In addition to the tax 
benefits, companies operating in FTZs enjoy simplified investment, 
trade and customs procedures which provide a convenient way to avoid 
Costa Rica's burdensome business licensing process.  The tax 
holidays provided for investment in FTZ manufacturing companies are 
scheduled to phase out in accordance with World Trade Organization 
(WTO) agreements by 2015, although it is likely that an alternate 
incentive regime will be in place by then.  In any case, the 
WTO-mandated change does not apply to those companies that export 
only services. Call centers, logistics providers, and software 
developers are among the companies that may benefit from FTZ status 
but don't physically export goods.  Such service providers have 
become increasingly important participants in the free trade zone 
regime. 
¶23. The active finishing regime, created by decree in August 1997, 
suspends taxes for renewable one-year periods on imported inputs of 
qualifying companies, and then exempts the inputs from those taxes 
when the finished goods using or containing them are exported.  The 
regime also facilitates a five-year renewable suspension of taxes on 
capital goods used to manufacture exported goods.  Companies within 
this regime may sell to the domestic market if they have registered 
to do so and pay pro rata import duties on capital equipment used 
for the domestic market.  Finally, the drawback procedure provides 
for rebates of duties or other taxes that have been paid by an 
importer for goods subsequently incorporated into an exported good. 
-------------------------------------------- 
Right to Private Ownership and Establishment 
-------------------------------------------- 
¶24. All private entities and persons, domestic or foreign, may 
establish and own businesses and engage in all but a few forms of 
remunerative activity. The exceptions are in sectors that are 
reserved for the state (legal monopolies) or that require 
participation of at least a certain percentage of Costa Rican 
citizens or residents (electrical power generation, broadcasting and 
professional services).  Under CAFTA-DR, the insurance and a part of 
the telecommunications sectors are now opening to competition.  In 
other activities, such as medical services, state firms operate, but 
that does not preclude private sector competition, which generally 
receives equal treatment to state companies.  Three banks owned by 
the state receive some advantages over their 11 private competitors, 
namely that they cannot be forced into bankruptcy, a guarantee not 
afforded to private banks. 
----------------------------- 
Protection of Property Rights 
----------------------------- 
¶25. Secured interests in both chattel and real property are 
recognized and enforced, and mortgage and title recording is 
mandatory. The laws governing investments in land, buildings and 
mortgages are generally transparent.  However, there are continuing 
problems of overlapping title to real property and fraudulent 
filings with the national registry, the government entity that 
records property titles.  The Costa Rican government does not 
prevent foreign title companies from operating.  While title 
guaranty is not a service traditionally offered in the country, 
Stewart Title Company, First Costa Rican Title and Trust and 
LatinAmerican Title Company all offer title guaranty and related 
services. 
¶26. Similar to fraudulent filings, investors have faced difficulties 
with transactions involving property located in indigenous protected 
zones that has been represented as property without other claims or 
risk of expropriation.  Investors should exercise appropriate due 
diligence when conducting transactions dealing with land in 
indigenous zones as they may either be unable to obtain free and 
clear title or risk future expropriation. 
¶27. Investment in Costa Rican real estate requires care; many U.S. 
real estate investors have experienced problems with obtaining clean 
titles, adverse possession by squatters, and unscrupulous lawyers. 
Problems with squatters often occur when absentee owners of 
undeveloped or vacant rural properties confront a Costa Rican 
agrarian law regime that is relatively quick to confer title to 
occupants of land considered "abandoned."  Landowners thus should be 
sure to demonstrate a continuing presence on and control over their 
land. 
¶28. Investment in beachfront property in Costa Rica faces a unique 
set of circumstances. Almost all beachfront is public property for a 
distance of 200 meters from the mean high tide line, with an 
exception for long-established port cities. The first 50 meters from 
the mean high tide line cannot be used for any reasons by private 
parties.  The next 150 meters, also owned by the state, can only be 
leased from the local municipalities for specified periods and 
particular uses, such as tourism installation, vacation homes, etc. 
Investors should exercise caution and obtain qualified legal counsel 
before purchasing property, particularly near beachfront areas. 
Potential investors in Costa Rican real estate should also be aware 
that the right to use traditional paths is enshrined in law and can 
be used to obtain court-ordered easements on land bearing private 
title.  Disputes over easements are particularly common when access 
to a beach is an issue. 
¶29. Costa Rica is a signatory of many major international agreements 
and conventions regarding intellectual property. It ratified the 
GATT agreement on Trade Related Aspects of Intellectual Property 
(TRIPS), which took effect in Costa Rica on January 1, 2000.  Eight 
bills to implement the TRIPS agreement were passed by the 
Legislative Assembly in 1999 and 2000.  One of these bills extended 
Costa Rica's patent protection to twenty years.  Building on the 
already existent regulatory and legal framework, CAFTA-DR required 
Costa Rica to further strengthen and clarify its IPR regime, with 
several additional IPR laws added to the books in 2008. 
¶30. While the legal framework governing intellectual property is 
basically in place, Costa Rica does not adequately enforce those 
rights.  At the beginning of 2002, the Costa Rican Government 
announced steps to improve intellectual property protection through 
a government strategy for strengthening the enforcement of IPR. 
Since then, the government has taken minor steps to increase 
enforcement efforts and to increase IPR training for judges and 
prosecutors.  Despite these steps, enforcement of IPR remains weak. 
The current attorney general has publicly stated that given limited 
judicial resources, IPR enforcement is a low priority. 
¶31. In 2002 the United States Trade Representative (USTR) moved 
Costa Rica from the Priority Watch List to the Watch List in its 
annual Special 301 Report.  In 2008 Costa Rica remained on the Watch 
List.  The USTR noted that IPR enforcement with respect to copyright 
piracy and trademark counterfeiting required greater priority and 
resources.  Significant delays in judicial proceedings and a lack of 
official investigators, public prosecutors, and criminal and civil 
judges specializing in intellectual property continue to hamper 
effective enforcement.  Since 2005 the U.S. Embassy in Costa Rica 
has actively recruited candidates to attend various IPR training 
seminars offered and funded by the United States Patent and Trade 
Office (USPTO) and the United States Department of Justice (DOJ). 
---------------------------------- 
Transparency of Regulatory System 
---------------------------------- 
¶32. Costa Rican laws, regulations and practices are generally 
transparent and foster competition, except in the sectors controlled 
by a state monopoly, where competition is explicitly excluded.  Tax, 
labor, health and safety laws are not seen as interfering with 
investment decisions.  When applying environmental regulations, the 
Costa Rican organization that reviews environmental impact 
statements has been slow in issuing its findings, causing delays for 
investors in completing projects. 
¶33. There are several independent avenues for appealing regulatory 
decisions, and these are frequently pursued by persons or 
organizations opposed to a public sector contract or regulatory 
decision. The avenues include the comptroller general (Contraloria 
General de la Republica), the Ombudsman (Defensor de los 
Habitantes), the public services regulatory agency (ARESEP), and the 
constitutional review chamber of the Supreme Court.  The procurator 
general's office (Procurador General de la Republica) is frequently 
a participant in its role as the government's attorney. 
¶34. The process has kept the regulatory system relatively 
transparent and free of abuse, but it has also rendered the system 
for public sector contract approval exceptionally slow and 
litigious. There have been several cases in which these review 
bodies have overturned already-executed contracts, thereby 
interjecting uncertainty into the process.  Bureaucratic procedures 
are frequently long, involved and can be discouraging to new 
investors. 
-------------------------------- 
Efficient Capital Markets and Portfolio Investment 
-------------------------------- 
¶35. There are no controls on capital flows in or out of Costa Rica 
or on portfolio investment in publicly traded companies.  Larger 
investors often arrange their financing abroad where rates tend to 
be lower and lending limits are higher.  Foreign investors are able 
to borrow in the local market, but they are also free to borrow from 
abroad. 
¶36. Within Costa Rica, long-term capital is scarce. 
Dollar-denominated mortgage financing is popular and common, even 
for Costa Ricans who do not earn their income in dollars because of 
more favorable lending terms for dollar-denominated vs. 
colon-denominated loans.  As an alternative to encourage long-term 
credit, since 2005 the government has published the value of 
"Unidades de Desarrollo", an inflation-adjusted index value that may 
be used to denominate debt transactions.  There is a small secondary 
market in commercial paper and repurchase agreements.  The 
securities exchange (Bolsa Nacional de Valores) is small and is 
dominated by trading in government bonds.  However, the exchange is 
looking to expand in several promising areas including currency 
futures and small stocks.  Stock trading is of limited significance 
and involves only a dozen of the country's larger companies, 
resulting in an extremely illiquid secondary market.  Stock volume 
traded is often in the range of $ 1 million per week. 
¶37. Credit is generally allocated on market terms, although the 
state-owned banks are sometimes obliged to act as development banks 
for activities deemed to be of public interest.  In addition, a new 
"development bank" structure involving both public and private banks 
is being unveiled in 2009.  Private commercial banks have been 
steadily increasing their share of the market since private banks 
were allowed to offer checking and savings accounts to the public in 
¶1996.  In recent years, smaller private banks have been absorbed by 
large multinationals, so that Costa Rica currently hosts 
subsidiaries of HSBC, Citibank, Scotiabank and GE Finance 
Corporation.  Nevertheless, the three state-owned commercial banks 
are still dominant, accounting for 43 percent of the country's 
financial system's assets as of November 2008. 
¶38. Consolidated total assets of the country's public commercial 
banks were approximately USD 9.3 billion in November 2008, while 
consolidated total assets of the eleven private commercial banks 
were approximately USD 6.90 billion. The combined assets of all bank 
groups (including affiliated pension funds and brokerage houses, 
plus factoring houses and credit unions) were approximately USD 
21.58 billion as of November 2008. 
¶39. Costa Rica's national council for the supervision of the 
financial system (CONASSIF) oversees Costa Rica's financial sector 
and consists of four principal components.  The country's general 
superintendent of financial institutions (SUGEF) regulates banks and 
other financial institutions.  The general superintendent of 
securities markets (SUGEVAL) oversees the securities exchange.  The 
general superintendent of pensions (SUPEN) oversees pension funds. 
The newly created superintendent of insurance (SUGESE) currently 
works within SUPEN.  The Costa Rican government is working to 
strengthen supervision of the financial sector with assistance from 
international donors. Legal and accounting systems are transparent 
and consistent with international norms.  Many well-known accounting 
firms in Costa Rica are affiliated with large U.S. firms. 
------------------ 
Political Violence 
------------------ 
¶40. Costa Rica has not experienced significant domestic political 
violence since 1948.  There are no indigenous or external movements 
likely to produce political or social instability.  During the 
national debate on CAFTA-DR, public unions opposed to the trade 
agreement organized strikes and marches designed to disrupt normal 
business activity.  Although they had threatened to bring the 
country to a halt during a national strike in 2006, the unions were 
unable to mobilize the masses and, at best, the street 
demonstrations were an annoyance.  Marches and demonstrations by 
these same groups in 2007 were peaceful.  The greatest potential 
(and localized) focal point for physical protest in 2009 in Costa 
Rica may be the Limon port facility on the Caribbean coast.  The 
Arias Administration appears determined to cede the port operations 
in concession but that is vigorously opposed by the dockworker's 
union. 
---------- 
Corruption 
---------- 
¶41. Costa Rica has laws, regulations, and penalties to combat 
corruption, though the resources available to enforce those laws 
have been limited.  Corruption became a major issue in 2004, when 
two former presidents and a number of officials at public 
institutions were placed in preventative detention on corruption 
charges; in late 2008, the two ex-president's trials were underway. 
Allegations of lower-level corruption are common, and some 
prosecutions have resulted.  In addition, as part of the 
implementing legislation for CAFTA-DR, in December 2007, the 
Legislative Assembly amended the penal code to include harsher 
penalties for public corruption.  This followed amendments made in 
2004 to make anti-corruption laws easier to interpret and apply. 
¶42. Costa Rica ratified the Inter-American Convention Against 
Corruption in February 1997. This initiative of the Organization for 
Economic Cooperation and Development (OECD) and the Organization of 
American States (OAS) obligates subscribing nations to implement 
criminal sanctions for corruption. The attorney general (Fiscal 
General de la Republica), pr