San José, Costa Rica, since 1956

C.R. Seeks Markets; Campaigns Heating Up

The year before national elections is usually marked by political gridlock, as parties shun consensus while jockeying to distinguish themselves.

That won’t stop President Oscar Arias from pursuing an ambitious agenda as he works to overhaul immigration and security laws and forge closer trade and diplomatic ties with European and Asian allies.

Perhaps the biggest changes will be wrought by the Central American Free-Trade Agreement with the United States (CAFTA), which went into effect for Costa Rica this month. CAFTA will dismantle state monopolies in telecommunications and insurance, allowing new local and foreign firms to offer services.

Among Costa Rican exporters, textile companies are perhaps the biggest winners. To enter the United States tariff-free under previous trade benefits, textiles had to be made with material and thread from the United States.

CAFTA removes tariffs on textiles made with material and thread from any CAFTA country. CAFTA will not immediately change ground rules for many other exporters because most goods already entered the United States tariff-free under the Caribbean Basin Initiative and the Caribbean Basin Trade and Partnership Act.

Costa Rica’s trade agenda does not stop there. Beginning Jan. 19, Costa Rica will begin talks with China on a free-trade agreement. And Costa Rica will work to finalize an accord between Central America and the European Union that includes market access, political cooperation and EU development aid.

As Costa Rica opens its borders to trade, the country is also increasingly seeking direct foreign investment. Early this year, the Arias administration will begin a bidding process for foreign firms to build and administer a port on the Caribbean, near the city of Moín.

On the world stage, Costa Rica will remain a player at least until October, when its seat on the U.N. Security Council expires.

The Arias administration will continue to lobby for initiatives to reduce arms and increase social spending.

The biggest political story of the year will be the primary elections. Parties must choose their presidential and congressional candidates by October, and campaigns are already underway.

Within the governing National Liberation Party (PLN), the field is crowded. Main candidates include former Justice Minister and Vice President Laura Chinchilla, San José mayor Johnny Araya and former Public Security Minister Fernando Berrocal.

Ottón Solís, founder of the Citizen Action Party (PAC) and two-time candidate, is expected to seek his party’s nomination. Epsy Campbell, his vice-presidential candidate in 2006 and the party’s president, is also considering a run.

The Soc ial Christian Unity Party (PUSC) appears to have rallied around former president Rafael Angel Calderón (1990-4), who is on trial on corruption charges and has not publicly announced his intentions.

PUSC, once a dominant player in a twoparty political landscape, won just 3.4 percent of the vote in the 2006 presidential elections. The next elections will either spell the party’s resurgence or its continued decline.

As the campaign heats up, consensus will be elusive in the Legislative Assembly.

Still, Arias, who controls the legislative agenda until May, will try to push through bills to crack down on crime, a top worry for many Ticos.

One bill would create a 48-hour express justice system to try criminals caught in the act; increase the use of preventive prison; and limit settlements in criminal cases, among other things.

A second bill, drafted by the Arias administration, would overhaul immigration rules, allowing foreigners to apply for residency in Costa Rica rather than from their home countries.

The administration is also pressing lawmakers to approve loans from international organizations for building and development projects. These include $850 million from the Inter-American Development Bank for roads and bridges; $65 million from the World Bank for disaster relief; and $72.5 million from the World Bank to revitalize the Caribbean port city of Limón.

These projects will not only help the country develop, said Presidency Minister Rodrigo Arias, they will also generate jobs as a global economic downturn threatens to increase unemployment here.

“The No. 1 goal for Costa Rica in 2009 is to come out of this crisis as little hurt as possible,” he said.


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