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### Viewing cable 05SANJOSE2104, STATUS OF THE PROPOSED LAW TO STRENGTHEN AND

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Reference ID | Created | Released | Classification | Origin
--- | --- | --- | --- | ---
05SANJOSE2104 | 2005-09-09 23:16 | 2011-03-15 21:00 | UNCLASSIFIED | Embassy San Jose

`

    This record is a partial extract of the original cable. The full text of the original cable is not available.

` `

    UNCLAS SECTION 01 OF 02 SAN JOSE 002104

    SIPDIS

    WHA/CEN
    EB FOR WCRAFT, BMANOGUE
    EB/CIP FOR WAYALA
    E FOR DEDWARDS
    WHA FOR WMIELE
    WHA/EPSC FOR KURS, LGUMBINER
    H FOR JHAGAN
    STATE PASS TO USTR FOR RVARGO, NMOORJANI, AMALITO

    E.O. 12958: N/A
    TAGS: ETRD ECPS ECON PREL PGOV SOCI CS
    SUBJECT: STATUS OF THE PROPOSED LAW TO STRENGTHEN AND
    MODERNIZE ICE

    REF: SAN JOSE 01828

    ¶1.  (SBU) Summary.  The Legislative Assembly,s Special Mixed
    Commission to review the Law to Strengthen and Modernize the
    Costa Rican Institute of Electricity (ICE) ended its 28-month
    tenure without coming to agreement on how to proceed with the
    proposed telecommunications reform law.  The contentious
    legislative project is now essentially at a standstill.
    Assembly members (deputies) could not agree on extending the
    Commission,s charter due to profound differences between
    those deputies that lean towards giving the venerated
    state-owned institution unprecedented autonomy and special
    treatment and those who want to encourage increased
    competition that would result from implementation of the
    United States-Central American-Dominican Republic Free Trade
    Agreement (CAFTA-DR).  Despite not moving forward on this
    proposed law, the Administration states that it is ready to
    submit proposed legislation in the areas on which the
    Commission could not agree.  End Summary.

    ¶2.  (U) The stated reason for proposing the Law to Strengthen
    and Modernize ICE was to give the organization the financial
    autonomy and resources to be able to compete against
    potential competitors in an open telecommunications market.
    The Costa Rican negotiators felt that the strengthening and
    modernization of ICE was so important that they inserted this
    into the text of the United States-Central America-Dominican
    Republic Free Trade Agreement (CAFTA-DR).  (Note:  The text
    of CAFTA-DR actually states that this law was to be passed by
    December 31, 2004.)

    ¶3.  (U) The Special Mixed Commission on ICE was chaired by
    Gloria Valerin, a deputy from President Pacheco,s Social
    Christian Unity Party (PUSC).  Other deputy members included
    Federico Malavassi from the Libertarian Movement Party (ML),
    Ricardo Toledo, the PUSC presidential candidate in the
    upcoming February 2006 election, German Rojas (PUSC), Alvaro
    Gonzalez (PLN), Carlos Benevides (PLN), Luis Gerardo
    Villanueva (PLN), Rodrigo Carazo from the Citizens, Action
    Party (PAC), Ruth Montoya (PAC), Emilia Rodriguez from the
    Patriotic Bloc (BP), and Carlos Avendano from the Costa Rican
    Renovation Party (PRC).

    ¶4.  (U) The Commission also consisted of eight
    representatives from several interested and knowledgeable
    organizations, including ICE, the Union of Chambers of
    Private Enterprises (UCAAEP), the Chamber of Information
    Technology, the labor union representing ICE workers, the
    non-governmental Free Consumers Association, National Council
    of University Rectors, the Costa Rican Federation for
    Environmental Conservation, and the Ministry of Science and
    Technology.  (Note: Only the deputy members of the Commission
    actually had a vote in official proceedings.)  This broad
    representation is reflective of the importance of ICE in the
    minds of many Costa Ricans.

    -------
    COMMENT
    -------

    ¶5.  (SBU)  Several options exist including: (1) sending the
    issue straight to the Assembly floor for a vote, (2) create
    an ad hoc deputies-only Commission to review the bill, or (3)
    do nothing.  Realistically, creation of a new deputies-only
    Commission is the most likely option, but the issue will not
    be any less contentious.

    ¶6.  (SBU)  Given the current political situation, it is
    unlikely this bill will pass in its current form prior to
    CAFTA-DR ratification.  Gilberto Barrantes, Minister of
    Economy and Chair of the President,s Economic Council said
    that the Administration is ready to submit proposed
    legislation in the areas in which the Commission could not
    agree.  He offered no more details than that.

    ¶7.  (SBU)  ICE needs more financial autonomy to compete in an
    open market; for instance, it should not be bound by some of
    the inflexible and arduous government processes with which it
    must currently comply, e.g., the cumbersome procedures for
    taking on new debt.  However, the proposed law to strengthen
    and modernize ICE, if passed in its current form, almost
    certainly would have caused problems complying with CAFTA-DR
    commitments (reftel).  The Administration and the Legislative
    Assembly will eventually need to agree on how ICE will
    function in the open telecommunications market created by
    CAFTA-DR.
    FRISBIE

`