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### Viewing cable 07SANJOSE655, CAFTA: REFERENDUM CONCERNS, BUT COALITION

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Reference ID | Created | Released | Classification | Origin
--- | --- | --- | --- | ---
07SANJOSE655 | 2007-04-04 20:08 | 2011-03-02 16:04 | CONFIDENTIAL | Embassy San Jose
Appears in these articles: http://www.nacion.com/2011-03-02/Investigacion.aspx

`

    VZCZCXYZ0001
    OO RUEHWEB

    DE RUEHSJ #0655/01 0942036
    ZNY CCCCC ZZH
    O 042036Z APR 07 ZFF4
    FM AMEMBASSY SAN JOSE
    TO RUEHC/SECSTATE WASHDC IMMEDIATE 7704
    INFO RUEHZA/WHA CENTRAL AMERICAN COLLECTIVE PRIORITY

` `

    C O N F I D E N T I A L SAN JOSE 000655

    SIPDIS

    SENSITIVE
    SIPDIS

    DEPARTMENT FOR WHA/CEN, WHA/EPSC AND EB; PASS TO USTR
    AMALITO

    E.O. 12958: DECL: 04/04/2017
    TAGS: PGOV ETRD PREL PINR CS
    SUBJECT: CAFTA: REFERENDUM CONCERNS, BUT COALITION
    COOPERATING; LEGISLATION MOVING

    REF: A. A) SAN JOSE 625
         ¶B. B) SAN JOSE 552

    Classified By: CDA Laurie Weitzenkorn per 1.4(d)

     ¶1.  (C) SUMMARY:  Although optimistic that CAFTA can be
    ratified by August-September, the Arias administration is now
    concerned about the prospect of a CAFTA referendum.
    Responding to a petition filed by CAFTA opponent, renegade
    PLN member, former legislator and presidential candidate Jose
    Miguel Corrales, the Supreme Electoral Tribunal (TSE) is to
    rule on the issue by April 15.  GOCR officials believe the
    TSE may be inclined to agree to a referendum, but they are

    SIPDIS
    reasonably confident of winning the referendum, if it comes
    to that.  The cost and time involved will be challenges,
    however; no such referendum has ever been held in Costa Rica.
     Clothed as a &benign8 way to resolve the CAFTA issue in
    public once and for all, the referendum could become one more
    delaying gambit by the opposition.  President Oscar Arias is
    reported to be adamantly opposed, but other cabinet members
    are contemplating strategy, if a referendum proves
    inevitable.  In the good news department, Arias,s coalition
    is cooperating again, and key CAFTA-related legislation
    continues to move ahead in the National Assembly.  END
    SUMMARY.

    ----------------------
    TEMPERED OPTIMISM. . .
    ----------------------

    ¶2.  (C) On March 29, the Ambassador called on Minister of
    Government Rodrigo Arias, who was easing back into a work
    schedule after hip replacement surgery.  Looking fit and
    sounding confident, Arias was optimistic that the GOCR would
    be able to ratify CAFTA and approve implementing legislation
    as &a package8 in August-September, the same prediction he
    has made recently in public.  (The next extraordinary
    legislative session begins in August, when the executive
    would have more control over the agenda.)  The Minister
    dismissed the &jump-start8 proposal of ML party leader Otto
    Guevara ) to take CAFTA to a no-notice, simple yes or no
    plenary vote in mid-April ) as going too far, too soon.
    (NOTE: Guevara discussed this idea with Department
    interlocutors during his Washington visit last month.)
    Although technically constitutional, such a move would fly
    against years of legal tradition permitting legislative
    debate of interpretative clauses when considering
    international agreements.  The Supreme Court,s activist
    constitutional chamber (Sala IV) would probably object (Ref
    A).

    ¶3.  (SBU) According to Arias, the GOCR will thus maintain its
    current course on CAFTA:

    -- Correct the procedural flaws in proposed fast track
    legislation by mid-April (as demanded by the Sala IV on March
    5), while moving ahead on key legislation in committee;

    -- Once fast track legislation is ready (probably in late-May
    or early-June, after one last Sala IV review, prompted by
    another likely opposition challenge), take CAFTA to the
    plenary for limited debate; and

    -- In the meantime, apply existing fast track rules to
    CAFTA-related legislation as required.  (NOTE: Existing fast
    track rules need no modification for use with regular
    legislation.  The modification is required to use fast track
    with treaties.)

    -----------------------------
    . . . BUT REFERENDUM CONCERNS
    -----------------------------

    ¶4.  (C) However, Minister Arias said the GOCR has concerns,
    which it is keeping private, about a possible CAFTA
    referendum.  In a separate meeting with the Ambassador on
    March 30, First VP and Minister of Justice Laura Chinchilla
    echoed those concerns.  Chinchilla explained that Jose Miguel
    Corrales (former PLN legislator and presidential contender
    and strong CAFTA critic) had been pushing the referendum idea
    since 2006.  Because he helped Chinchilla draft the
    Referendum Law when they were both legislators, he is
    considered an expert on the subject.  (NOTE: In October 2006,
    the TSE rejected a petition by Corrales and others for a
    non-binding CAFTA referendum, arguing that non-binding polls
    were not permitting under the Referendum Law.  Corrales and
    company then pressed for a binding referendum.  Their
    petition reached the Sala IV, but was bounced back to the TSE

    for action on February 16.  END NOTE.)  According to
    Ministers Arias and Chinchilla, the TSE must issue a decision
    in this latest challenge within 60 days, i.e., by April 15.

    ¶5.  (C) Chinchilla said President Arias was adamantly opposed
    to the referendum idea, but the GOCR would have to proceed
    very carefully if the TSE decided in favor.  She and Minister
    Arias both described the outcome as uncertain.  Of the three
    TSE members, two had some doubts that a referendum could

    SIPDIS
    apply to any legislation with a fiscal aspect (such as a free
    trade agreement dealing with tariffs and duties), but they
    were leaning pro-referendum nonetheless.  The views of the
    third member ) currently a substitute ) were unknown.
    Minister Arias was confident that TSE president Luis Antonio
    Sobrado, whom he described as &young and forceful,8
    ultimately would make the right decision ) to reject a CAFTA
    referendum because of the restriction on referenda with
    fiscal implications.  Even if the TSE supported a CAFTA
    referendum, Arias believed that regular legislative work
    could continue while the referendum was prepared.

    ¶6. (C) VP Chinchilla did not sound as confident on either
    issue. She told the Ambassador that the rectors of the four
    leading state universities may turn the heat up after Holy
    Week by calling in public for the referendum, in exchange for
    a pledge to tone down CAFTA opposition on campus and in the
    streets. For Costa Ricans in and out of politics, (as well as
    the TSE members), this eminently &Tico8 call to consensus
    might be too powerful to ignore, in Chinchilla,s opinion.

    ¶7.  (C) If the TSE ruled in favor of the referendum, the GOCR
    could still take the initiative, according to Chinchilla.  To
    enact the referendum, the executive could submit appropriate
    legislation to the Assembly.  Because the referendum
    procedure calls for an up or down, simple majority vote in
    the plenary, without Sala IV review (as is the case with
    normal legislation), Chinchilla said the GOCR might bundle
    some CAFTA-related legislation with the referendum bill.  The
    opposition would then face a dilemma: either oppose the
    referendum to block the CAFTA-related bills, or support the
    referendum, but approve the CAFTA legislation at the same
    time.  The Assembly itself could also call for a referendum,
    Chinchilla explained, but 38 votes would be required to pass
    the relevant legislation. The Arias administration,s working
    majority would block this route, if the opposition tried it.

    ¶8.  (C) Chinchilla was more concerned about the third route
    to a referendum: a public petition.  Only five percent of the
    national voter registry would be needed, approximately
    150,000 signatures.  The opposition could collect those, and
    delay long enough to submit their petition so as to
    jeopardize the CAFTA timetable.  Ministers Arias and
    Chinchilla both believe the GOCR could win a CAFTA
    referendum, but the VP acknowledged that cost and campaigning
    would be challenges.  The GOCR would not be permitted to
    campaign, for example, relying on the private sector to carry
    the day against an already well-organized and well-funded
    CAFTA opposition.  The first test of the Costa Rican
    referendum law and the only such vote on CAFTA no doubt would
    attract support from international anti-globalization
    organizations and from Venezuela, as well.  Meeting the
    minimal 40 percent turnout rate for the referendum to be
    considered valid is another challenge, Chinchilla added.

    -------------------------------
    COALITION IS COOPERATING, AGAIN
    -------------------------------

    ¶9.  (C) Meanwhile, despite some mid-March turbulence, the
    GOCR,s pro-CAFTA coalition seems to be working smoothly
    again.  Problematic ML legislator Mario Quiros (Ref B) is not
    only supporting the GOCR,s position on correcting the
    procedural flaws in the fast track legislation, but he is
    writing the majority committee report, according to ML
    president Otto Guevara.  Energized from his Washington visit,
    Guevara agreed with the Ambassador in a meeting on March 27
    that President Arias should designate one minister to run the
    CAFTA effort full-time.  Minister of Foreign Trade Marco
    Vinicio Ruiz is fully occupied with CAFTA substance and
    negotiations with USTR.  Minister w/o Portfolio Marco Vargas
    thus would be a logical selection, Guevara said.

    --------------------------
    LEGISLATION MOVING FORWARD
    --------------------------

    ¶10.  (SBU) In the legislature, three of 13 bills necessary to
    harmonize national law with CAFTA have reached the floor and

    are pending plenary action: dealership regulation,
    ratification of the Budapest IPR treaty and ratification of
    the trademark treaty.  Committee deliberations on six more
    bills are to be completed by the last week in April: opening
    the telecom market, strengthening public sector entities,
    opening the insurance market, a bill dealing with
    miscellaneous patent and trademark issues, a bill dealing
    with IPR enforcement issues, and legislation dealing with the
    protection of new plant species.  Before the Holy Week
    recess, key pro-CAFTA legislators were stressing in public
    the need to keep moving and the urgency of mounting a
    pro-CAFTA offensive with the private sector after Easter.

    --------
    COMMENT:
    --------

    ¶11.  (SBU) A referendum would further cloud an already messy
    CAFTA picture, and would mean more delays in a much-delayed
    timetable.  It would also be a tempting solution for tired
    legislators, looking for a way to share (or pass off) the
    CAFTA burden.  We hope the GOCR,s concerns are fueled more
    by prudence than alarm.  From our reading of related
    jurisprudence (such as the Procuraduria,s decision of April
    ¶24. 2006), it appears that a free trade agreement which
    regulates tariffs cannot be approved by a referendum, but we
    are not the local experts.  The details of referendum
    procedures are not clear to us, either, nor is the Sala IV,s
    potential role, e.g., could referendum results or procedures
    be challenged in the Supreme Court?  Even without a
    referendum, the CAFTA end-game here will not be elegant, and
    the timetable continues to slip.  Instead of a clean
    ratification-implementation sequence, we can expect to see
    motion at varying speeds and times on both tracks, using a
    complex, multi-layered strategy including special and normal
    legislative committees, as well as fast track and normal
    legislative rules.  As one long-time political observer and
    pollster told us, in politics or in soccer, Ticos play their
    best when they are under the most pressure, &when their
    noses are almost under water.8

    WEITZENKORN

`