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### Viewing cable 06SANJOSE2702, PRESIDENT ARIAS ON HIS VISIT TO WASHINGTON

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Reference ID | Created | Released | Classification | Origin
--- | --- | --- | --- | ---
06SANJOSE2702 | 2006-12-01 21:09 | 2011-03-08 16:04 | CONFIDENTIAL | Embassy San Jose

Appears in these articles:
http://www.nacion.com/2011-03-07/Investigacion/NotasDestacadas/Investigacion2704388.aspx
http://www.nacion.com/2011-03-07/Investigacion/NotaPrincipal/Investigacion2704402.aspx
http://www.nacion.com/2011-03-07/Investigacion/NotasSecundarias/Investigacion2704436.aspx
http://www.nacion.com/2011-03-07/Investigacion/NotasSecundarias/Investigacion2705536.aspx

`

    VZCZCXYZ0008
    OO RUEHWEB

    DE RUEHSJ #2702/01 3352141
    ZNY CCCCC ZZH
    O 012141Z DEC 06
    FM AMEMBASSY SAN JOSE
    TO RUEHC/SECSTATE WASHDC IMMEDIATE 6765
    INFO RHEHNSC/NSC WASHDC IMMEDIATE
    RUEHZA/WHA CENTRAL AMERICAN COLLECTIVE PRIORITY

` `

    C O N F I D E N T I A L SAN JOSE 002702

    SIPDIS

    SIPDIS

    WHA/CEN FOR J:MACK; NSC FOR D:FEARS

    E.O. 12958: DECL: 11/30/2016
    TAGS: PREL PGOV PINR ETRD ECON CS US
    SUBJECT: PRESIDENT ARIAS ON HIS VISIT TO WASHINGTON

    REF: SAN JOSE 2685

    Classified By: AMBASSADOR MARK LANGDALE PER 1.5(D)

     ¶1.  (C) SUMMARY:   On November 29, the Ambassador met with
    President Arias to discuss the latter,s upcoming visit to
    Washington.  The Ambassador noted Arias,s position as a
    leader with regional stature, and suggested President Bush
    would be interested in Arias,s views on developments in
    Nicaragua and Cuba, as well as his domestic agenda, topped by
    CAFTA-DR and fiscal reform.   On Nicaragua, Arias opined that
    Ortega &would have no choice8 but to be different than he
    was 20 years ago.  On Cuba, Arias said he was willing to
    discuss a peaceful transition, but hoped this issue would not
    be the major topic in Washington.   Arias noted the irony of
    Ortega making more positive statements on CAFTA-DR than some
    opposition figures in Costa Rica, giving Arias more
    ammunition to use against them at home.  Arias stressed that
    he wanted to talk more &about Costa Rica8 this visit,
    giving the Ambassador an opening to stress the need for
    CAFTA-DR implementation, tax reform, judicial modernization
    and improved protection for investors, which would generate
    long-term benefits dwarfing the short term gains from
    international development assistance.   Arias is likely to
    discuss assistance proposals, anyway, including the so-called
    Costa Rica Consensus and a debt-for-education swap idea.  Our
    response should be to continue lowering his expectations.
    Costa Rica is best placed to help itself.  END COMMENT.

    ¶2.  (U) On November 29, the Ambassador, accompanied by
    PolEcon Officer David Henifin, met with President Arias to
    discuss the latter,s December 3-6 visit to Washington.
    Arias was alone, mentioning that FM Bruno Stagno was in
    Europe.

    -----------------------------
    CUBA, NICARAGUA AND CAFTA-DR
    -----------------------------

    ¶3.  (C) Arias asked what would likely be on the President,s
    agenda.  The Ambassador reminded him that the White House had
    originally planned the meeting for after Costa Rica passed
    CAFTA-DR, but the President had accelerated the timetable.
    Given Arias,s position as a leader with regional stature,
    the President would be interested in his views on
    developments in Nicaragua and Cuba, as well as Arias,s
    domestic agenda, topped by CAFTA-DR and fiscal reform.

    ¶4.  (C) On Nicaragua, Arias opined that Ortega &would have
    no choice8 but to be different than he was 20 years ago,
    given the changes in Nicaragua.  Ortega &must (govern)
    responsibly,8 he added, although visiting Cuba so soon after
    the election was a &mistake8 on Ortega,s part.  On Cuba,
    Arias said he was willing to discuss a peaceful transition,
    but he hoped the issue would not be the major topic of his
    conversation with the President.  On CAFTA-DR, Arias noted
    the irony of Ortega making more positive statements of late
    than some opposition political figures in Costa Rica.  Arias
    asked the Ambassador to forward pro-CAFTA statements by
    Ortega or prospective members of his government.  The more
    positive comments from Nicaragua, the more pressure Arias
    said he could apply in Costa Rica.  He dismissed hardline
    anti-CAFTA critics Alberto Salom, deputy leader of the PAC
    party,s faction in the legislature, and Jose Merino, sole
    representative of the Frente Amplio (Broad Front) party, as
    &Allende socialists8 out of step with the times.

    ---------------------------------
    DOMESTIC AGENDA:  NEEDED REFORMS
    ---------------------------------

    ¶5.  (C) Recalling that when he visited Washington 20 years
    ago, senior USG officials &only wanted to discuss
    Nicaragua,8  Arias stressed that this time, &I want to talk
    about Costa Rica.8  Taking the opening, the Ambassador
    outlined the new USG framework for foreign assistance, which
    placed Costa Rica in the highest tier as a &sustaining
    partner.8   The Ambassador highlighted how Costa Rica is
    doing, compared to OECD standards, in terms of governing
    justly and democratically and investing in people.  Costa
    Rica is considerably below OECD standards in terms of
    economic growth and the business environment.  For example,
    the Ambassador noted that Costa Rica ranked 160th out of 175
    on tax collection as measured in the World Bank,s &Doing
    Business8 index, highlighting the need for an effective and
    workable tax system to help underwrite Arias,s domestic
    agenda.  With CAFTA-DR implementation, appropriate fiscal
    reforms and improved protection for investors, Costa Rica has
    the potential to become the Singapore of the region.
    ¶6. (C) Arias was receptive, especially on the need for tax
    reform, but rejoined that Costa Rica,s overall economic
    growth was good, and may top seven percent for 2006.  In
    overall foreign direct investment in the region, Costa Rica
    ranked third behind Chile and Mexico.  The Ambassador
    suggested that the performance of Costa Rica-based
    multinationals like Intel and the impact of the lucrative but
    narrow real estate market (mostly appealing to high-end
    foreign buyers) skewed these figures.  Over the long run,
    growth in small to moderate businesses, and job generation
    outside the tourism sector, would be the keys to core
    economic growth in Costa Rica.

    --------------------------------------------- -----
    USG ASSISTANCE: EDUCATION AND COSTA RICA CONSENSUS
    --------------------------------------------- -----

    ¶7. (C) Turning to assistance issues, Arias floated two
    proposals for discussion in Washington, the first a debt for
    education swap, modeled on the debt for land arrangements
    that launched many of Costa Rica,s national parks 20 years
    ago.  The Ambassador cautioned that such a proposal probably
    was not realistic, as the new Congress is likely more
    interested in boosting education spending at home than
    helping education systems abroad.  In the long run, opening
    and reforming Costa Rica,s economy would give the GOCR far
    more resources to spend on education and other social
    projects.

    ¶8. (C) Arias then asked for USG reaction to his Costa Rica
    Consensus idea (for more assistance and debt relief for
    &responsible8 middle-income countries which spend more on
    social programs than on defense).  The Ambassador replied
    that the concept was interesting, even noble, and possibly
    worth a closer examination from a disarmament perspective,
    given the remilitarization in the region (i.e., Venezuela).
    The idea, however, does not mesh with the USG,s new foreign
    assistance framework, which is geared instead towards helping
    developing countries to help themselves.  Targeted technical
    assistance is likely, but extensive bilateral aid, such as
    Costa Rica benefitted from in the past, is unlikely.  The
    Ambassador added that realistic international consideration
    of the Consensus idea would take time and certainly not bear
    fruit before Arias,s term ends in 2010.

    ¶9.  (C) COMMENT: Arias,s comments suggest an opening for
    more focused discussion on his domestic agenda, stressing the
    need to make reforms at home without expecting large-scale
    bilateral help from abroad.  Arias,s views seem to be
    changing, but he still views the region and Costa Rica
    through the prism of the 1980s, when Costa Rica relied on
    extensive USG assistance.  A lingering sense of
    exceptionalism, which argues that Costa Rica deserves special
    treatment (and international assistance) because of its
    record as a stable democracy and responsible international
    actor, will need to be diplomatically overcome.
    LANGDALE

`