Economy & Trade, Headlines, Latin America & the Caribbean

COSTA RICA: Arias Faces Challenge of Society Polarised by CAFTA

Manuel Bermúdez

SAN JOSÉ, May 8 2006 (IPS) - Nobel Peace laureate and former president Oscar Arias (1986-1990) started his second presidential term Monday in Costa Rica with a very different outlook than the one he faced 20 years ago.

His biggest challenge today will be preserving social stability in a society that is highly polarised by a hot issue: the Central American Free Trade Agreement (CAFTA), signed with the United States.

The new president, whose adversaries criticise him for what they call his free-market, neoliberal economic policy proposals, will face opposition in the streets, especially because of his aim of gaining congressional approval for CAFTA, which the United States negotiated with the Dominican Republic and five countries of Central America: Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua.

Only the Costa Rican legislature has failed to ratify CAFTA so far.

Arias won the Feb. 5 elections by a tiny margin, beating out the candidate of the centre-left Citizen Action Party (PAC), Ottón Solís, by a mere 1.12 percent difference. Altogether he took less than 25 percent of the vote.

The new president also faces the pressure of business groups that backed his candidacy and to whom he promised to push CAFTA through Congress.

In the election campaign, Arias’s National Liberation Party (PLN) absorbed 75 percent of all private contributions to political parties: 628,000 dollars of a total of just over 831,000 dollars registered by all of the parties, according to the Supreme Electoral Court.

In his inaugural speech, the new president called for compromise and said he would not govern for any particular group or sector, but stressed that his commitment was to insert Costa Rica into the global economy and boost the country’s competitiveness.

Thanks to political accords achieved on May 1 between the PLN, the right-wing Libertarian Movement, the outgoing centre-right Social Christian Unity Party (PUSC) and two independent members of the single-chamber legislature, Arias can count on 38 of a total of 57 votes in Congress.

That means the governing party ensured that it would hold the presidency of the legislature – and that the new administration has enough votes to obtain approval of CAFTA.

Analyst Luis Guillermo Solís told IPS that the main challenge facing the new president is building an understanding that will make governance possible, which he said will require dialogue and a “strong social pact.”

“Without that, it is very difficult to imagine social peace,” he said.

“I would see it as careless of the executive branch to move forward based on an automatic majority in the legislature, as a gauge of political sentiment,” said Solís. “I think it could lead to a scenario of turbulence that would not be a good thing for a president who is coming to power with the support of a minority of voters.”

With respect to the position taken by the PAC, the main opposition force, which argues that the free trade agreement with the United States should be renegotiated, he said it makes no sense to insist on a renegotiation that is not going to happen, especially while civil society groups continue to take to the streets to protest CAFTA.

Solís said the PAC should assume a more “constructive” leadership role and join the “No to CAFTA” movement with a more clearly defined position, while the government should listen to and address the grievances of the “significant” sector of society that is opposed to the free trade treaty.

“That’s why I believe it is necessary to build stronger support for CAFTA, as a broad sort of national understanding, but for the moment it seems the will is lacking for reaching such an understanding,” said the political scientist.

Nevertheless, Solís said that if the president tries to get the free trade agreement ratified by Congress in the first few days of his administration, it will be hard to avoid a confrontation, which could be in the realm of ideas, in the legislature – or could play out in other scenarios, such as mass demonstrations in the streets.

Arias has repeatedly stated that CAFTA will be approved in the first six months of his term.

But Alvino Vargas, head of the National Association of Public and Private Employees, told IPS that the country’s social organisations are united in their aim to block ratification of the treaty.

The fact that trade unions already sent Arias letters to demand better wages, when he was still president-elect, complaining that they have not kept up with inflation in recent years, would seem to point to protests in the streets in the near future.

Miguel Gutiérrez Saxe, director of the State of the Nation project that carries out social, political, economic and population studies, said that according to its latest studies, the distribution of wealth in Costa Rica – which has the strongest human development indicators in Central America – has become more and more unequal.

Analysts agree that the main strength of the new president – who won the Nobel Peace Prize in 1987 for his role in peace talks in Central America – is his international prestige, which should help boost investor confidence.

But his chief weakness is the social polarisation triggered by plans to open up the state monopoly on telecommunications and insurance, and by CAFTA.

Social organisations and student groups held a protest against CAFTA just after the inauguration ceremony.

Several thousand demonstrators gathered outside the National Stadium, where the ceremony took place, shortly after First Lady Laura Bush of the United States, who headed the U.S. delegation, had departed.

Just before he took office, Arias held a dinner for other Nobel Peace Prize-winners, including Betty Williams, founder of the Northern Ireland Peace Movement, and former Polish president and trade unionist Lech Walesa. He also met with several U.S. lawmakers.

The new president said he would promote the “San José Consensus” in foreign policy – an international forum that would push for measures like writing off the foreign debt of countries that increase spending on education and social development.

Arias said that although Latin America has left de facto military regimes in the past, the region is nevertheless moving away from its democratic principles.

Sunday’s announcement by Venezuelan President Hugo Chávez that he would not be able to attend Arias’s inauguration ceremony because he was setting off on a European tour on Tuesday disappointed Guatemalan President Óscar Berger, who planned on using the occasion to seek special terms for oil imports from Venezuela.

Arias had planned to make a similar attempt, and also meant to set up a meeting between the presidents of Ecuador, Colombia and Venezuela.

The Colombian Foreign Ministry lamented that it was unable to take advantage of the occasion for Presidents Álvaro Uribe and Chávez to discuss issues like Venezuela’s withdrawal from the Andean Community.

Meanwhile, the presidents of Central America decided Monday to head to the fourth EU-Latin America/Caribbean summit Friday in Vienna with a common position.

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