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Costa Rica at a junction

The scandal that broke yesterday around the funding of the campaign of President Arias provides yet another insight into what is at stake in the referendum on CAFTA. In 1948 major reforms of the constitution created a system that guaranteed free, universal access to basic services; health care, education and social security. Part of this reform includes the notion that access to a decent house, electric and telephone service should be considered basic human rights. A widespread internalizing of these beliefs has preserved this system in the face of permanent efforts by powerful actors to dismantle the structures which are the base of the model.

The economists who work for the World Bank and the IMF must have never studied Costa Rica. Here, they have managed to do exactly the opposite of what all of the International Financial Institutions (IFI) mandates prescribe. Is it a coincidence that people in Costa Rica have moved out of poverty, while in countless countries where they have swallowed IFI poison, growing gaps in income disparity and a deepening of poverty continue? Why, in spite of these sharp contrasts in results is there not more questioning of the logic and motives behind these policies?

The scandal reported in the university paper is connected to these issues.

There have been countless efforts to dismantle the system that exists, principally by people who would like to turn these services (such as telephone and electric services) into entities which turn a profit for them. The most recent national struggle to prevent the privatization of services was in 2000 [Popular uprising in Costa Rica against privatization of utlities], when a law was introduced to the National Assembly, and passed on the first round, which would divide ICE, the company which currently administers telephone and electric services into two companies. This was correctly viewed by the population as the first step towards privatization of both services.

ICE has an interesting and forward thinking operating philosophy.

Since telephone services (especially cellular) are immensely profitable, the company uses the profits from telephone services to subsidize electricity generation and distribution. This has proven to be an extremely effective model in many respects. Prices for all of these services are substantially lower than anywhere in the region. Heavy investment has been made in extending services to remote rural areas, even though these investments are not necessarily 'profitable', in terms of a return recovery model. Perhaps most significant, and unprecedented anywhere in the world, 90% of the energy generated in Costa Rica is from renewable sources, which includes hydroelectric, geothermal and windmills!

The struggle of 2000, commonly referred to in Costa Rica as the 'combo' brought the country to a standstill. Once the law had passed the first round in the National Assembly, there were weeks of unrest in the. The protests were so widespread and permanent that the only option left to the government was to revoke the law. It was kind of a big "oh never mind" from the politicians who planned on becoming partners in private service providing companies.

The scandal exposed in the paper involved two meetings which President Arias attended during his campaign to become president. The first was held in May of 2005 in Guatemala. The article documents the names and amounts given of prominent financial players in the region, totaling over $180,000. to Arias' presidential campaign.

The apparent the purpose of the first meeting was to coordinate a plan to ensure passage and ratification of CAFTA in the region and in the U.S. The article alleges that Arias was designated the head of a committee that was formed by this group, and in that role later attended a large fundraising event in Washington to collect money which would be used to promote ratification of CAFTA. The players, especially in the Guatemala meeting have business interest in telecommunications and internet services and the passage of CAFTA would require Costa Rica to open their services to 'competition'.

The impact of the article will not necessarily significantly affect the results of the referendum on Sunday. The part of the population here who have studied the issue already understand that the 'hungry wolves' who are pushing for CAFTA to be implemented see public services as the most desired pickings.

Perhaps more importantly, if the referendum defeats CAFTA, which, unless there is blatant fraud, is seen here as increasingly likely; President Arias will face a severe political crisis. It will be of the magnitude that if there were a parliamentary system, it would force an election to be called.

The allegations of the article implicate him in serious violation of two electoral laws; receiving campaign donations from foreign sources, and not reporting donations received. This could very well lead to a widespread demand accompanied by public protest demanding his resignation. Not only is his political program in serious jeopardy, his ability to finish his term as president may also be at risk.

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