San José, Costa Rica, since 1956

President’s Second Year Looking More Complex

President Oscar Arias will begin the second year of his term still holding the reins of the Legislative Assembly, but judging by Tuesday’s annual legislative elections, a rocky road lies ahead.

Arias’ special Labor Day address to the assembly, an event that draws a Who’s Who of Costa Rican politics on May 1 each year as leaders fill the assembly floor dressed in their finest, began more than four hours behind schedule because of legislative conflict.

Despite late-hour efforts by opposition parties to unseat assembly president Francisco Pacheco of Arias’ National Liberation Party (PLN), the diminutive lawmaker held onto his post, and liberacionistas took four of the other five directorate positions as well. However, multiple rounds of voting were required to fill each post, and accusations of misconduct and secret alliances flew throughout.

And though a decision on the assembly’s biggest apple of discord, the Central American Free-Trade Agreement with the United States (CAFTA), is now in the hands of the people through a public referendum being planned by elections officials, that change has created new disagreements over how – and even if – the assembly should process the implementation legislation for the controversial pact.

Unsurprisingly, Arias’ 85-minute address sought to make the best of the situation, urging lawmakers “to understand that (the people’s) hopes are more important than any of us, more valuable than any of the fleeting vanities and disputes that separate us.”

The President touted economic achievements including reduced inflation and increased growth during the past year, as well as his administration’s social aid initiatives, and signaled tax and electricity sector reforms among his priorities for the coming year.

Kid Gloves Come Off

Though the outcome of this week’s assembly elections were similar to last year’s – a near-sweep by Liberation – the tone of a legislature that had characterized itself as a kinder, gentler and more dialogue-focused than its bickering predecessor certainly appears to have changed.

Following Pacheco’s hotly contested reelection, PAC legislator Alberto Salom accused Arias, who’d told the daily La Nación earlier in the week that he would “twist arms” if necessary to ensure a Liberation win, of staying true to his word and pressuring lawmakers to get the right outcome, while others accused Pacheco of underhanded dealings.

The subsequent two-hour series of annual speeches by the assembly’s eight faction heads revealed priorities that run the gamut and revealed plenty of criticism of the Arias administration. Firebrand Oscar López of the Access Without Exclusion Party (PASE) called for a constitutional convention to reorganize the government and allow the country to take “a totally drastic step”; pro-CAFTA legislators urged the assembly to move ahead quickly on the implementation agenda for the pact.

Elizabeth Fonseca of PAC provided the most aggressive speech, using much of her 15 minutes to directly attack Arias. She accused the administration of “verbal violence” against PAC, a myopic focus on CAFTA, which PAC opposes, and unethical practices.

“This has been an administration just like the rest, with the same practices of… corruption we’ve seen in the past,” she said.

Lorena Vásquez of the Social Christian Unity Party (PUSC) also attacked Arias, accusing his administration of failing to provide clear leadership and criticizing the President for blaming government failures on the slowness of the assembly.

All eight leaders touted assembly accomplishments such as the approval of a $30 million World Bank loan for rural education and a $127 million loan from the Japanese International Cooperation Bank for sewer infrastructure, as well as reforms to the Institute for Mixed Social Aid (IMAS).

Overall, the assembly has approved 74 bills thus far – 10 introduced during this term, 61 left over from the 2002-2006 term, and 3 left over from the 1998-2002 term.

However, CAFTA implementation bills still loom; some bills of widespread consensus a year ago, including a law to reform public works concessions, are still in the pipeline thanks to regulatory mistakes; and a major Arias priority, tax reform, hasn’t yet been introduced.

Arias Cites Achievements The audience Arias addressed when he took to the podium Tuesday night included leaders with the future of CAFTA, or part of it, in their hands: the justices of the Supreme Elections Tribunal (TSE), who this week decided to accept the Executive Branch’s request for a referendum, and the justices of the Constitutional Chamber of the Supreme Court (Sala IV), who may eventually evaluate the agreement’s constitutionality (see separate story).

Perhaps because of the uncertainty at hand,Arias devoted only a few paragraphs of his 16-page speech to CAFTA. He called the TSE’s promotion of a referendum “a relief,” assured his listeners that he trusts the people to decide, and announced that he’ll vote in favor of the agreement.

“I’ll do it not because (CAFTA) is perfect for Costa Rica, but rather, simply because it’s good for the majority of Costa Ricans and because, put in a balance, its positive aspects are more numerous than those about which we may harbor doubts,” he said.

In the rest of the speech, Arias, who touched on campaign themes such as Costa Rica’s need to “lose its fear of change” and “think big,” cited a wide range of achievements: a reduction by 4% of the number of families living in shantytowns; a reduction in cases of dengue fever and malaria by 75% and 52%, respectively; the launch of a scholarship program to keep high-school kids in school, which now covers 52,000 students nationwide; and a drop in inflation to 9%, its lowest level in 13 years.

He claimed that the newly launched Tourism Police has helped bring about a 15% drop in crimes committed against foreigners during the first three months of this year.

Another positive report: according to Arias, the Ministry of Public Works and Transport (MOPT), whose budget is 56% bigger this year than in 2006, has now completed maintenance work – patching potholes and cleaning – on all paved national roadways, or approximately 4,500 kilometers.

Of his priorities for the coming year, some appear to have widespread support, such as a constitutional reform to increase educational spending; infrastructure reform; and a new development bank to help small businesses. Others face an uncertain future.

The speech emphasized the importance of tax reform to increase social spending further, but new Libertarian Movement faction head Luis Antonio Barrantes renewed his party’s opposition to any and all new taxes, while PAC’s Fonseca says her party wants an income tax, not the value-added tax Arias supports.

As for the Law to Modernize the Costa Rican Electricity Institute (ICE) and the rest of the CAFTA implementation agenda, which Arias also noted as a priority, Fonseca and other anti-CAFTA legislators maintain those bills should be shelved until the referendum on the agreement takes place.

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