San José, Costa Rica, since 1956

ICE Power Swap Revives Conflict

The naming of a new executive president for the Costa Rican Electricity Institute (ICE) this week drew fire from labor unions and rekindled controversy surrounding the administration’s highly anticipated proposal to break up the state-run monopoly and open up parts of the telecommunications market to competition.

The proposals are part of a massive restructuring of Costa Rica’s service markets required under the Central American Free-Trade Agreement with the United States (CAFTA), under consideration in the Legislative Assembly, and are already being compared to legislation that set off weeks of violent protests that brought the nation to a state of near paralysis six years ago (TT, March 24, 2000).

The two proposals – one of which would strengthen and modernize ICE and the other which would gradually lift the state monopoly on telecommunications – are now being reviewed by members of the ICE Board of Directors, who will then provide the Executive Branch with recommendations before the bills are sent to the Legislative Assembly for debate. Some legislators are criticizing the administration of President Oscar Arias for taking so long to send the bills, though Environment and Energy Minister Roberto Dobles, who oversees ICE, told The Tico Times the drafting and revision process has been completed “in record time.”

In 2000, the Legislative Assembly’s approval in first debate of ICE modernization plans known as the “Combo ICE” brought thousands of Costa Ricans to the street for 19 days in protests that resulted in violence and blockades that eventually forced the government to withdraw the bill.

This week’s developments, which came as CAFTA opponents planned protests to coincide with today’s Independence Day celebrations, prompted union leaders to accuse the administration of seeking to privatize ICE, and have jolted one of the country’s largest government-run agencies.

In With the New

On Monday, Jorge Gutiérrez announced he was resigning from his post as head of ICE. His resignation letter to Arias, which was distributed to the press Tuesday along with copies of a note from Gutiérrez’s doctor, cited health reasons as the cause of his decision.

The ICE leader, who, like Arias, took office in May, and whose last day of work is today, denied that his resignation has anything to do with differences of opinion with the administration over telecommunications reform and modernization plans for the institute.

“I made the decision Sunday with my family, after I had a hypertension crisis,” said Gutiérrez, 60, who said his high-stress 18-hour days as ICE president, along with his struggle with diabetes, were taking a toll on his health.

President Arias expressed his sadness about Gutiérrez’s departure and announced his choice of Pablo Quirós, 68, as the new president of ICE at a press conference Tuesday at Casa Presidencial.

“He believes in what we said during the campaign: ICE has to be modernized,” Arias said of Quirós, reiterating his stance that the institute has no reason to fear competition.

He added that “it’d be difficult, I think, for anyone to know as much about telecommunications” as Quirós.

The President’s Cabinet must still approve Quirós’ nomination before he takes office – they were expected to do so at last night’s special Cabinet meeting in Cartago, east of San José – but he has already faced clashes with union leaders who criticized the nominee for his “attitude of privatization” and promised to fight his appointment, not ruling out the possibility of strikes.

“We don’t trust you,” ICE union leader Fabio Chaves told Quirós at a press conference Wednesday that became heated when Chávez took the microphone. Chaves – who, as the head of the Association of Costa Rican Electricity and Telecom Institute Employees (ASDEICE), represents the institute’s 12,000 permanent employees – said Quirós’ background, which includes work with multinational companies and the World Bank, shows he supports a policy of privatization.

Quirós also founded ICE’s National Operation System for Telecommunications in the 1960s, according to a copy of his resume provided by Casa Presidencial.

“Pablo Quirós is privatization incarnate… he’s an economic mercenary,” the union leader told The Tico Times.

A Battle of Semantics?

Fueling the debate over privatization is a difference of opinion about the meaning of the word itself. Both Arias and union leaders say they are against privatizing ICE, but administration leaders appear to define privatization as selling ICE, while unions define it as privatizing the industry by allowing other companies to compete.

In a recent interview, Rodrigo Arias, the President’s brother and spokesman, told The Tico Times “we don’t want to privatize ICE… We want ICE to be strengthened so it can play in a competitive market.”

Arias, the Presidency Minister, said there is a difference between what Costa Rica is doing and the “privatization” policies other Latin American countries have carried out, in which they sold publicly owned public service agencies to private companies.

The two-part project would open up the most lucrative parts of the telecommunications market to private competition – ICE’s monopoly on cellular phones, Internet and business telecommunications services would be lifted, as CAFTA demands, though the institute would retain control of the less profitable land-line market – while at the same time streamlining and “strengthening” ICE to prepare it for competition.

Earlier versions of the bills were considered during the administration of President Abel Pacheco (2002-2006), but without success; Arias announced his administration would revise the legislation after he took office.

The new versions of the Law to Strengthen and Modernize ICE and the General Telecommunications Law have been in the works for four months, according to ICE General Manager Teófilo de la Torre, and have passed through the hands of as many as 100 administrators, executives, lawyers, engineers and politicians.

De la Torre told The Tico Times the General Telecommunications Law would restructure ICE, the Public Services Regulatory Authority (ARESEP) and the Ministry of Environment and Energy (MINAE), while giving private companies equal opportunities to offer Internet and telephone services to consumers. Dobles said MINAE would become the Ministry of Environment, Energy and Telecommunications.

This change wouldn’t sideline the government’s environmental protections, he said, because the law establishes “new funds” for the ministry’s expanded responsibilities.

Now, ICE has a grip on Costa Rica’s $1.5 billion telecommunications market, providing cellular services to 1.5 million Costa Ricans, land phone lines to 900,000 and Internet services to 45,000, in addition to the services provided by Radiográfica Costarricense S.A., the state-owned Internet provider and an ICE subsidiary. RACSA provides 105,000 individual and 7,000 corporate accounts in addition to other services, according to spokesman Mario Zaragoza.

The latest draft of the proposal puts ARESEP in charge of television and radio frequency concessions – now handed out by the National Radio Control Office – as well as cellular frequency concessions, which don’t exist under today’s system. ICE, along with private companies, would have to go through ARESEP for these concessions.

ARESEP would also charge consumers a 6% tax on services that ICE would use to set up phone and Internet services in Costa Rica’s most rural, marginalized communities.

The other bill would strengthen ICE, streamlining bureaucratic processes that the state monopoly must go through to contract labor and equipment and obtain credit, according to de la Torre, who helped revise the proposals. ICE would have to create a marketing department and learn how to commercialize its products, he added.

The Politics of Reform

Dobles said he expects the bills to reach the assembly within a week or two, and that the process has taken months because it involved the participation of so many people.

However, legislators from the opposition Citizen Action Party (PAC), Libertarian Movement and Social Christian Unity Party (PUSC) say this isn’t fast enough.

Leda Zamora of Citizen Action told the daily La Nación the government might have a “fantasy that this bill will move quickly,” but that its discussion and approval will take time.

Chaves said at Wednesday’s press conference that strikes to protest Quirós’ appointment are possible, though he told The Tico Times in a later phone interview that any protests will likely focus on CAFTA. Unionled anti-CAFTA protests are planned for today (see separate story).

PAC legislators hearkened back to the 2000 “Combo ICE” conflict in a statement released Wednesday, calling the new bills the “Mega Combo II.”Anti-CAFTA activists often refer to the Combo protests as an example of what public opposition can accomplish.

The public opposition to the ICE Combo, controversial in part because it would have allowed companies to develop hydroelectric and geothermal projects in national parks, caused former President Miguel Angel Rodríguez (1998-2002) to suspend the controversial bill, later taken out of consideration completely when the Constitutional Chamber of the Supreme Court (Sala IV) ruled that the assembly had violated its own procedures in its handling of the project.

CAFTA, however, revived the issue because it requires Costa Rica to lift state monopolies on telecommunications and insurance.

Rodrigo Arias said the government is anticipating protests as the telecom reform and CAFTA bills are discussed in the assembly.

“It’s the government’s responsibility to respect the assembly’s decision, to see to it that there is order and no violence in the streets,” he said. “But we can’t let threats from unions make us decide not to move forward with (the CAFTA agenda).”


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