San José, Costa Rica, since 1956

Has the Moment of Truth Arrived?

Elections official Max Esquivel had a nightmare about the referendum on the Central American Free-Trade Agreement with the United States (CAFTA).

He dreamed that the results of Sunday’s vote hinged on 10 ballots from Isla del Coco, a 36-hour boat ride from mainland Costa Rica. Worried about theft or fraud, he clutched the ballots during the entire ride.

“We have a lot of adrenaline,” Supreme Elections Tribunal (TSE) President Luis Antonio Sobrado explained.

This week marks the climax of four years of discussions, protests, threats and promises over CAFTA. The country has been nearly evenly divided on this controversial free-trade pact, which would affect issues dear to voters, such as health care, telephone service and insurance.

But the drama surrounding CAFTA will not end Sunday night, when preliminary results are released. The Tribunal could take 15 days or more to declare an official outcome, after counting the votes by hand in a process broadcast on TV and on the Internet. Either side could win by just one vote.

Even after the final tally is reported, CAFTA’s fate may still be in question. Political analyst Luis Guillermo Solís says the campaigns will likely continue to push or oppose the contents of the treaty after the vote.

“Everyone has to admit what the result is, that the people have spoken,” he said. “But… the referendum is not to be regarded as the end of political life, the end of political agendas.”

If voters approve CAFTA, the Legislative Assembly must still pass a series of 13 laws – the “implementation agenda” – by Feb. 29 in order for the pact to go into effect, according to Presidency Minister Rodrigo Arias.

The most controversial laws in this package would take away monopolies from the Costa Rican Electricity Institute (ICE) and the National Insurance Institute (INS).

Elizabeth Fonseca, head of the anti-CAFTA Citizen Action Party (PAC) faction, has said that even if voters approve the treaty, PAC will work to block the implementation agenda. Legislators could do that by passing motions to the laws, or refusing to complete the 38-member quorum required to do business.

“We will do everything in our power to keep this country from having (free-trade) tools so contrary to its interests,” she said in an interview late last month.

The implementation agenda would face strong protests in the streets, too, says Eugenio Trejos, spokesman for the Patriotic Movement for No on CAFTA. This opposition is formidable: an anti-CAFTA rally drew about 100,000 people Sunday, by some estimates.

(See separate story.)

“We reserve the right to resist – actively and passively,” Trejos said in a recent interview.

Mayí Antillón, head of the pro-CAFTA National Liberation Party (PLN) faction, said legislators could use a fast-track procedure to pass the agenda.

If time gets tight, Costa Rica could ask for an extension from all CAFTA signers – the United States, Dominican Republic, Guatemala, El Salvador, Nicaragua and Honduras, said a U.S. trade official. Some think the country should begin this process now.

“We should already be reaching out to our Central American friends regarding the possibility of an extension,” said a leading member of the business community who asked not to be named.

If CAFTA does go into effect, President Oscar Arias said this week in a televised address that the country could leave the treaty after six months if it does not bring the expected benefits. Political analyst Solís says “that’s not going to happen” because Costa Rica would be sued by investors hurt by the country’s withdrawal.

The aftermath of Sunday’s vote also depends on the numbers, said political analyst Constantino Urcuyo. If CAFTA wins by a large margin, the Arias administration will be in a stronger position to push through the rest of its agenda, including the implementation laws.

If CAFTA wins by a small margin, Urcuyo said, opponents could refuse to accept the results, especially if there are allegations of fraud. Urcuyo compared this scenario to the 2006 elections, when PAC leader Ottón Solís eventually accepted defeat after a historically close race marred by alleged irregularities (TT, Feb. 17, 2006).

“I don’t think the country could take that a second time,”Urcuyo said.“We could go into a very difficult political situation,” he said.

In an effort to keep the vote clean and democratic, the Tribunal has invited teams of international observers, including 100 representatives from the Organization of American States (OAS).

A No Vote?

The executive branch, legislators and members of the business community have signaled that they would still push for some of CAFTA’s terms if voters reject the treaty.

President Arias told the daily La República that he would meet with political leaders to decide “what parts of the implementation agenda can be salvaged.” Still, Minister Rodrigo Arias has told the press that the executive branch “will not insist” on opening state monopolies on telecommunications and insurance if CAFTA loses.

Trejos has suggested that Costa Rica negotiate a new treaty with the United States under fairer terms, but U.S. members of Congress disagree about whether that’s desirable or politically feasible. (See separate story.)

Other trade options may be on the table. President Oscar Arias will travel to China Oct. 22, and the two nations are expected to discuss a possible free-trade agreement. Meanwhile, most Costa Rican exports will still enter the United States tariff-free under the Caribbean Basin Initiative (CBI), although this law could be repealed at any time by the U.S. government.

Later this month, Central American countries will begin negotiating a free-trade agreement with the European Union. But Minister Rodrigo Arias says a “no” vote on CAFTA would “complicate” Costa Rica’s entry into that treaty.

“It’s very difficult to expect that the European Union will ask for anything less from Costa Rica than what’s being asked by the United States,” said Lynda Solar, Executive Director of the Costa Rican-American Chamber of Commerce (AMCHAM).

Notwithstanding other options, a “no” vote would be a major blow to Arias’ presidency, given that he has devoted much of his 1.5 years in office to passing CAFTA, said political analyst Urcuyo.

“If the “no” wins, Arias is almost dead politically for the rest of his administration, unless he finds other issues to promote, but I don’t see that,”Urcuyo said. “I think his legacy is in question marks.”



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