by Rod Hughes

The Comptroller General’s Office has filed formal charges against persons responsible for the spending of a $1.5 million donated by Taiwan to provide housing for a occupants of a slum in the western San Jose suburb of Pavas. This can’t be good news for ex-Minister of Housing Fernando Zumbado who resigned over the scandal. It appears that the basis for the Comptroller complaint is the Law against Corruption and (Illicit) Enrichment.

The fund was turned over to the Banco Centroamicano de Integracion Economica (BCIE), a regional development bank and spend instead for advisors and study reports on poverty under Zumbado’s overall direction. Zumbado testified before a Legislative Assembly committee that he did not “bother” his boss, President Oscar Arias, with reports about disbursement of the money but defended his action as having farther-reaching effects than simply aiding the 600-some families living in the slum.

Editorials in national newspapers have indicated that not many agree with him. But, even though the charges have been filed with the Prosecutor General’s office, little may result from them. Direct contributions to government agencies appear to fall in a legal gray area and are often treated as discretionary funds. The damage may be confined to Zumbado’s political career. Although other Housing Ministry officials many be named, it did Zumbado’s position no good that one of the biggest contracts, for $315,000, for advisory services went to a research firm of which he was one of the founders.

But the Comptroller General was not finished with the Housing Ministry. A separate report indicates that the whole Ministry apparatus is paralyzed. In the first six months of this year, it has spent only 3% of its budget and not a single colon of that was from the funds earmarked to eradicate and replace slums, one of the chief reasons the ministry was created in the first place. Even worse, this paralysis will make nearly impossible the fulfillment of one of President Arias’s major campaign promises, the eradication of 20,000 slum units, in the 20 months remaining in his term.

The only consolation for ministry employees who have received this double blow is that the ministries of Public Works and Public Security have also underspent, according to the Comptroller.

by Rod Hughes

Will wonders never cease? President Oscar Arias had a good word to say for his Colombian counterpart, Hugo Chávez. Speaking to a news conference after addressing the European Union Parliament in Brussels as part of his 12-day itinerary in Europe, he called Chávez’s selling petroleum with soft payment schedules to other Latin American and Caribbean nations a “generous” gesture of “solidarity.”

But Arias also distanced himself from the controversial Venezuelan chief of state by noting that “our ways of thinking are very different” and that Costa Rica is following a much different development plan than Chavez’s vision for his country. Arias repeated his believe that inter-nation free trade pacts are the wave of the future. Until this year when the price of petroleum shot sky high, Arias and Chávez sniped at one another from a distance. But the pragmatic Arias has softened his tone since then, although he initially rejected becoming a part of Chávez’s Petrocaribe initiative but later succumbed to the lure of better payment schedules for oil imports.

“”Yes,” said the realistic Costa Rican president, “if you have a checkbook of $350 million daily (oil revenues) you can do many things and I believe President Chávez is doing them.” That is the same attitude that allowed him to swallow his doubts about Petrocaribe and place his country as the 19th nation to sign up.

Showing the breadth of his foreign policy, Arias will stop off in Washingon D.C. Sept. 24 on his way back from Europe to meet with U.S. President George W. Bush as a symbolic way of kicking off the Central American Free Trade Agreement (CAFTA) after the last obstacle to its ratification is past. The Arias administration had a long haul to get 13 bills passed that were in conflict with CAFTA articles. Costa Rica was the last nation in the pact to be in a position to join, after having to ask the CAFTA nations for an extension. The last law is expected to pass barely ahead of the Sept. 30 deadline on that extension.

by Rod Hughes

The Arias Administration is urging “emergency” treatment of an organized crime bill that sets stiff penalties for such acts as money laundering, financing or practice of terrorism and international traffic of arms, narcotics and human beings. The measure was once part of a comprehensive crime package but the legislators extracted the organized crime portion to treat separately.

Update: Chief Prosecutor Francisco Dall’Anese characterized Monday’s bomb attacks on the Court office and presecutor’s facilities in Pavas as “terrorist acts” and called for quick passage of the anti-terrorism bill. A homemade bomb exploded in the prosecutors’ dining room but caused only slight damage. But the bomb that exploded in the court caused more serious damage. On a tour of the damaged installations with 15 judges Thursday, he said it was obviously the work of “organized crime.”

The lack of anti-terrorism legislation has caused nations banded together to share terrorism information to threaten to expell Costa Rica from the organization’s ranks, which would severely happer police intelligence here. Lacking terrorism legislation has caused severe problems for the courts in recent years and has been severely criticized editorially by newspapers such as La Nacion and The Tico Times.

One such example was the conspiracy of drug cartels last year to assassinate Minister of the Presidency Rodrigo Arias and then-Security Minister Fernando Berrocal. Details about the plot were never released but arrests were made–before the courts, examining the law, found out that such terrorist conspiracies were absent from the Criminal Code. The only alternative was to expell the would-be assassins to their native Colombia on immigration violations.

Of course, it is likely that they will return to this country at will under false passports and, indeed, police have played such yo-yo expulsion games in recent years. Only if they actually murder someone can they be prosecuted under normal criminal codes. The lack of legislation is easy to explain–30 years ago, anti-organized crime law was unnecessary in the absence of organized crime.

But the increasing traffic of cocaine through this country has led to a long-overdue attention to organized crime and its accompanying terrorism. The plot against two high cabinet ministers was an attempt to intimidate a government that has been increasingly successful in confiscating huge shipments of drugs, resulting in massive dollar losses to the cartels. It did not have its desired result and anti-narcotics police have not flagged in their efforts.

So far, other types of terrorism, such as that of Muslim extremists that preoccupy the U.S. Homeland Security Agency, are not a known factor here. But the absence of a legal mechanism against terrorist acts against other countries is an open invitation for Al Qaida and others to use this country as a refuge and marshalling ground.

But the petition of Presidency Minister Arias for urgent treatment of the bill was dismissed by Citizen Action Party (PAC) deputy Elizabeth Fonseca as “cheap politics.” She added, “In this matter, one should fall into neither populism nor demagoguery.” And Lorena Vasquez of Social Christian Unity party reacted with resentment, saying, “It isn’t necessary for the minister, and even less so the Administration’s party, to pressure us about this bill…”

by Rod Hughes

Some years ago, the Legislative Assembly voted a constitutional amendment to dedicate 6% of the gross internal product of the country to education. It was a handsome gesture from the lawmakers but each succeeding annual budget afterwards violated that pledge. It appears it may finally happen next year.

Of the overall budget of some 4 billion colones (about $2 billion) education will receive a whopping 1.1 billion colones to go to salaries and infrastructure mainly. But INA, the national training institute, which trains adults for skilled jobs as plumbers and electricians, was not included in the education portion of the budget, as the Comptroller General’s office was quick to point out.

Blessed with a budget surplus attributed to better tax collecting, the Arias Administration has about 40% more revenue than it had at this time last year, despite petroleum and balance of payments difficulties. So social concerns such as education is addressed in this budget. Another healthy sign is the lack of indebtedness– 72% of education expenditures are to be paid for in cash and only 28% by bonds,. This contrasts to nearly half of expenditures paid with debt in the past few years.

But that is not all the higher spending proposed, if the lawmakers pass the measure. the administration has increased outlays to beef up police forces to meet a crime situation that has grown increasingly graver. The administration hopes to have another 800 policemen in the streets by the end of 2009, and 200 more in administration.

Nor has the Ministry of Health been forgotten with 569 new jobs. And the Ministry of Justice, which administers the prisons and jails, will get 200 more guards. However, no new prisons are contemplated to overcome overcrowding of current penal institutions that often results in premature release of criminals, distorting the results of the courts’ and police successes in combatting crime.

Now the ball is in the lawmakers’ court, to approve or alter the budget. That some opposition parties will try to make political hay of it is expected but past carping of legislators that the administration has not destined more funds to social improvement will be harder for them. As Finance Minister Guillermo Zuniga points out, 45% of the budget is devoted to social improvement, including infrastructure. “We passed the magic barrier of 6%… in education. This is a great achievement for the country without a tax reform.”

During the administration of Dr. Abel Pacheco (2002-2006) the President presented a series of austerity budgets to control debt while the Legislative Assembly, divided among a series of small parties, squabbled over a comprehensive tax reform. After wasting four years on the tax package it was passed–and declared unconstitutional by the Supreme Court. Since then, the entire issue has not been mentioned.

by Rod Hughes

A news story in the English-language weekly, The Tico Times, predicted it two weeks ago–the free trade pact with Panama unanimously passed its first debate yesterday in the Legislative Assembly with a 41 to nothing score. Contrasted with the long CAFTA struggle, the deputies greased the measure right through and are expected to give it a final pass next week, turning into law.

In fact, the only criticism of the free trade treaty with Panama the newspaper could find was from impatient businessmen who thought the lawmakers were taking too long to pass it. Panama was not included in the Central American Free Trade Agreement (CAFTA) with the United States, the rest of Central American and the Dominican Republic, a Caribbean nation, because, technically, it is not considered a part of Central America. Only a cartographer could tell you why.

The pact was signed a year ago but lacked ratification by the legislative branch. “The treaty with Panama was long overdue,” Tomas Pozuelo of Jack’s Snacks told The Tico Times. His company, which has been selling chips and other nibblies to Panamanian customers for 30 years, complained that high tariffs for his exported products made it increasingly hard to compete in price, even though no one questioned the quality and tastiness of his Costa Rican-made snacks.

His difficulty was price–without that hated 15% import duty tacked on to his product, he expects sales to immediately pick up 20% in the first year. And Pozuelo is not alone, points out TT reporter Gillian Gillers–this country exports everything from furniture to medicine to Panaman’s 3.24 million potential customers. What the canal country lacks in sheer size of its market it makes up in easy access and bulky exports, such as food, seems right on Costa Rica’s doorstep compared with, for example, the European Union.

Not surprisingly, even a deputy like Elizabeth Fonseca, whose Citizen Action Party (PAC) fought a bitter battle against CAFTA, lauded the Panama pact as a “fair trade agreement.” She cited Panama’s size, population and per capita income as being more compatible with Costa Rica. “There aren’t the same asymmetries as with CAFTA,” she added. (Evidently one fear PAC lawmakers had was the sheer size of the U.S. economy and the perceived danger that this country would become “Miami South” culturally and economically. Now, with the U.S. economy facing tremendous stress, it may appear somewhat less formidable.)

by Rod Hughes

Despite a severe balance of payments deficit caused by high petroleum prices and its resulting effect on the internation trade marketplace, the Arias Administration is sitting again on a budget surplus as it did at the end of last year. And the Arias Administration is planning to include in the 2008 budget more spending on social programs, possibly to forestall criticism by socialist opposition parties.

The English-language weekly The Tico Times last week reported on the surplus, attributed to more efficient tax collecting by the Ministry of Finance. The Citizen Action Party (PAC) has already severely taken the administration to task for not doing more for the poor, probably laying the groundwork to make this an issue in the 2010 election.

With appropriate fanfare, the Arias Administration presented their intent to increase social program spending by 45.2% in a TV special carried Sunday on all national channels. Actual figures were not revealed, noted the daily paper La Nacion. Included in the package will be increases in education, health, pensions and in direct aid for poor families. But agriculture, science and technology and public security will not be neglected.

This year, the budget presented a cautious increase of 24% over 2007, including hikes for hospital services, housing, family aid, pensions, etc. But Minister of Education Leonardo Garnier says that next year’s budget will increase expenditures in his field to 6.3% of the gross internal product. (Some years ago, the Legislative Assembly voted into law a minimum percentage of the national product spent on education, a law honored more in intent than in actual practice.) Garnier said that some of the money will go to infrastructure. (Many schools are in lamentable condition, despite the country’s pride in its educational system.)

Meanwhile, the Education Ministry is not standing still for this year. The ministry announced a 9.3% increase in base salaries for teachers with a Bachelor’s degree from university and 15.6% for those with a Licenciatura in education, a postgraduate degree just short of a Master’s. However, teachers’ unions must approve the salary increases and those unions have shown a tendency to not only try to pressure further increases but to squabble among themselves.

by Rod Hughes

The Tibetan-Costa Rican Cultural Association has accused President Oscar Arias of turning down an unofficial visit by Tibetan spiritual leader Dalai Lama that the association had arranged for Sept. 10. In the past, mainland China has severely criticized other countries’ leaders for hosting the Tibetan, seen in the West as a force for peace.

China has been strongly condemned many times for the subjection of the Himalayan neighbor and for the ruthless repression of peaceful demonstrations of Tibetans who wish to regain their independence. The Chinese government accuses the Tibetan leader who roams the world in exile of being an agitator.

China’s president, Hu Jintao, is scheduled for an official visit here in October. According to Milagro Rodriguez, vice president of the association, the Costa Rican “government considers the presence of His Holiness might provoke a cancellation of …Hu’s visit.” The daily paper La Nacion tried to obtain confirmation of this version from the Foreign Ministry but was unsuccessful.

The association’s statements appear logical. Hu’s visit is a return of Arias’s journey to Beijing last October and much has happened in the 14 months since this administration made the controversial decision to abandon long-standing ties with Taiwan in order to cement relations with the Oriental giant that considers Taiwan a break-away province. Since then, China has become Costa Rica’s second most important export market.

But for some Costa Ricans who still lament the foreign policy about-face regarding Taiwan and in sympathy with Tibet, this minor incident raises further fears of concessions to China, especially taking into account this country’s presence on the UN Security Council. For a country led by a Nobel Peace Prize laureate, it seems to some that the administration has been notably silent in denouncing human rights violations, even the recent aggression of Russia against Georgia.

mp;gt;by Rod Hughes</strong>

You can always tell when a committee of legislators are confronted by a hot potato that no one wants to touch–they mull it over, hoping it will go away. And so it is with the members of the Legislative Assembly’s Special Committee on Campaign Reform. Campaign finance, they decided, will be discussed last.

The only thing wrong with procrastination is that the reform to the Elections Code must be passed by June, 2009, in order to be in place in time for the 2010 national elections. The country’s independent election watchdog, the Supreme Elections Tribunal (TSE), has long since ruled that it can do nothing about reforming the process–it is like a court, seeing that the law is enforced but powerless to make its own rules.

As it stands now, parties can receive campaign contributions from anywhere in the world, which raises the spector of undue influence by foreign governments or even multinational companies. The TSE deplores this but can do nothing about it. In fact, Tribunal president Luis Antonio Sobrado is urging that the deputies go full speed with the debate since the past elections showed TSE had no control over where the contributions came from or even a way of tracing them.

Other items up for discussion are really no-brainers. For example, Costa Ricans living outside the country have no absentee ballots available. When the election laws were drafted, on the heels of a civil war in 1948 caused by rampant election fraud, this was deemed beyond the technical capacity of Costa Rica. Besides, there were not as many Ticos abroad as there are today. To oblige them to return to the country just to vote is now absurd.

Judge Sobrado points out that TSE has already submitted to the Legislative Assembly a proposal to control campaign contributions but the lawmakers insist that all the reforms be incorporated into one package. Whether this is a valid point or merely an excuse to put off what is surely due to be a hot debate or even a ploy ti avoid the deadline or reform so the parties can go their own merry way without interference is a matter for lively conjecture.

The much discussed 2002 election which boosted President Abel Pacheco into office is widely cited as an example of Wild West financing. Pacheco himself received several questioned checks which he returned after their sources were made public. This is not to question President Pacheco’s honesty–no scandals about his four-year term have come to light and, indeed, he was widely praised for letting two former president of his party be indicted without using his political clout to protect them as has all too often happened in the past.

The fact is that a candidate cannot review all the contributions and delve into their sources. The hurlyburly of a campaign with its constant personal appearances and speeches and interviews does not leave him the time. Usually, this duty is left to the campaign treasurer who, the candidate hopes, is honest and competent. But if the treasurer is presented with strict TSE guidelines, he has no excuse to accept a dubious gift to his candidate.

But the bill must pass out of committee before December in order to leave enough time to go through floor debates before June next year, notes Citizen Action Party deputy Jose Rosales. 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by Rod Hughes

Legslative Assembly deputies have been given a break next week. August is considered a special session where the Arias Administration controls the agenda and Minister of the Presidency Rodrigo Arias consulted with the whips of the four main parties and withdrew all bills from discussion temporarily, Cynics may say, “Vacation? How can you tell?”

Recently, the English-language weekly, The Tico Times, conducted an exclusive interview with Julio Garita, a public relations cameraman for the congressional body who is charged with preserving the sometimes less-than-deathless speeches lawmakers give in debate. During the years (1973-78 and 1988 to present) he has seen it all and recorded it, including the feud between Liberation Movement’s Federico Malavassi and Juan Jose Vargas of the tiny Nationhood First Party in which the former gave Vargas the finger during debate.

He feels that, “People think they make a lot of money, that they’re lazy and don’t work very much. People don’t believe in lawmakers…” Garita himself thinks that they don’t prepare well for their tasks. “They tend to read their speeches. The good orators can be counted on one hand. You don’t see great debates any more…” he told reporter Gillian Gillers, adding that he blames the lawmakers themselves for the deterioration of their image.

Garita provides documentary evidence for researchers and TV channels with juicy sound bites, In one quote from the paper, he gave an indication of why more work does not get done. Some leglislators ask him to record their speeches on cassettes they provide. “Jose Merino (of the Broad Front Party) has 64 cassettes, each with two hours of tape.” Merino, a leftist, is one of the most bitter foes of the Central American Free Trade Agreement (CAFTA) so he had a lot to say since the referendum that passed CAFTA.

When the legislators return, the permanent Committee on Public Income and Spending will grill Chief Justice Luis Paulino Mora about the hike in salaries that the court granted to 46 judicial employees. The committee has been making headlines these past several weeks with interrogations of ex-Housing Minister Fernando Zumbado on his use of a $1.5 million grant from Taiwan and then Presidency Minister Rodrigo Arias on the administration’s use of a $2 million grant.

In other political news, President Oscar Arias has apparently tentatively proposed Legislative Assembly deputy Clara Zomer, a civil engineer from Cartago, to take over the Housing Ministry to replace Zumbado. Zomer admits she has talked with the Chief Executive about the subject but the final decision “is up to him.”

by Rod Hughes

It would seem that no one has confidence in Costa Rica’s economy except the international experts. While polls show confidence in the Arias Administration’s handling pf the economy is slipping, such international rating firms as Moody’s and Standard and Poor have recently given high marks to the country.

Moody is a company that rates creditors for investors, basing their assessment on financial indicators and debt. The firm is the most recent respected house to feel that the country is a good risk for one’s investment. Earlier, Standard and Poor had the same assessment. In fact, Moody’s this week changed Costa Rica’s rating from merely “stable” to “positive,” citing the turn-around of the internal debt from a budget shortfall of past years to a surplus at the end of 2007.

But, plagued by inflation led by soaring fuel and food prices, Ticos are not quite so bullish on their country. A recent poll by Demoscopia for the daily newspaper Al Dia shows public condifence in their president and his administration slipping, although still high compared with past administrations. But the public’s perception has reduced President Oscar Arias’s popularity since only last April.

For instance, those opining that Arias is doing an excellent job had actually risen to an astonishing 44.2% last April but slipped back again in July to 27.5%. Still, those feeling that he is doing an acceptable job is now 50.7%, so opinion has not slipped too far. Those who qualify his performace as poor rose to 20.3% in July from 13.2% in April. And public feeling that he is fulfilling his campaign promises has slipped below 50% from the 57% of April.

It appears that the public knows that most of the economic crunch on the poor and middle class is due to outside forces Arias cannot control, such as the sagging U.S. economy, and that he does not have to be told, “It’s the economy, Stupid.” But as one reviews his gasoline and grocery receipts, it gets increasingly harder to keep that in mind.