[Marxism] Democrats vs. Central America (O'Grady, WSJ)

Walter Lippmann walterlx at earthlink.net
Mon Oct 1 08:09:36 MDT 2007

(100,000 marched against CAFTA, today's GRANMA newspaper reports. 
This may help explain the note of panicked hysteria from O'Greedy.)

October 1, 2007
October 1, 2007

America's only socialist senator traveled to Costa Rica last week,
but it wasn't to work on strengthening ties between our two nations.
Vermont's Bernie Sanders went to San José with Rep. Mike Michaud (D.,
Maine) to aid the local opposition to the U.S-Central American Free
Trade Agreement, which has not yet been ratified by that country.

The congressional visit was strategically timed. As one of seven
signatories to Cafta, and the only one that hasn't made it official,
Costa Rica has only until Feb. 29 to adopt the legislation necessary
to join the pact. But first it must be ratified and time is running
out. The Costa Rican Congress has been gridlocked on the matter, so
on Sunday there will be a national referendum asking the electorate
to decide directly.

Messrs. Sanders and Michaud were invited by the leader of the
country's anti-Cafta movement, Ottón Solís. Their role was to boost
the "No" campaign by declaring that the rejection of Cafta will not
affect the preferential access to U.S. markets for a variety of Costa
Rican products that now exists under the Caribbean Basin Initiative.
Reps. Charlie Rangel (D., N.Y.) and Sandy Levin (D., Mich.) sent a
similar message, by letter, to Mr. Solís in January; Harry Reid and
Nancy Pelosi sent a letter last week to the Costa Rican ambassador in
Washington telling him the same. The idea is to undermine the
reciprocity argument that might help get Cafta approved.

It is odd that U.S. legislators are going out of the way to
discourage the opening of markets for U.S. exporters. But egging on
Costa Ricans to defeat Cafta also runs contrary to U.S. political
interests. Cafta is an essential tool for strengthening democratic
capitalism in Central America. If it is killed in Costa Rica, it will
be a victory for Venezuela's Hugo Chávez, who is trying to drive a
wedge between Latin America and the U.S. and help Iran put down roots
in America's backyard.

According to the latest polls, the race is a statistical dead-heat.
Anti-Cafta strength is partly explained by the country's powerful and
well-organized labor unions, led by the union for the government's
monopoly electricity and telecommunications company (known by its
Spanish initials as ICE). The union resists Cafta because it would
force competition in wireless and Internet services -- though it
would do nothing to disturb the ICE monopoly in fixed-line telephony
and in electricity.

The ICE union is joined in its opposition to Cafta by other
public-sector unions -- notably teachers -- as well as by
intellectuals, the university set and a surprising number of
radicalized Costa Ricans whose most important political issue seems
to be anti-Americanism. The anti-Cafta campaign has been marked by
violence and intimidation.

Costa Rica is often held up as a model for tolerance and democracy in
the region, and if nothing else, the fight over Cafta reveals just
how far left this nation has tilted. The hard left might not be a
majority, but it is certainly a force that threatens the nation's
civility. A Cafta defeat is likely to pull the country further in the
direction of the anti-globalization extremists.

There are also enormous economic costs associated with rejecting
Cafta: Costa Rica would be the only country in Central America
without an institutionalized commitment to open trade and investment
with its neighbors and with the U.S. This would inflict grave damage
on its investment profile. Things could get even worse if Panama's
FTA with the U.S. is ratified by the U.S. Congress, as is expected.
Import barriers in Costa Rica would be likely to divert trade and
capital flows to more open markets.

In that case, efficiency, productivity and growth will almost
certainly suffer. In telecom, for example, Costa Rica is already
falling far behind its neighbors because of the ICE monopoly. Many of
its services are unreliable and modern technology that other
countries take for granted -- hand-held wireless devices such as
BlackBerries, for example -- are but futuristic dreams for Costa
Ricans. At some point foreign investors, comparing Costa Rica to its
neighbors, are bound to respond negatively to the country's declining
competitiveness in a sector so tied to productivity.

In a sense, Sunday's vote is a referendum on whether Costa Rica
should move forward by integrating with the modern world or cling to
its closed economy and nanny-state traditions. Mr. Solís, a losing
presidential candidate in last year's election, wants to preserve the
past, though it is hard to see how he can make it work. Wages,
pensions, debt service and higher education drain 80% of the budget
every year; law enforcement, the judiciary, roads and ports are being
starved. The government simply doesn't have the money to build a
modern telecom network.

Two weeks ago the pro-Cafta campaign took a big hit when a leaked
memo revealed that a member of President Oscar Arias's cabinet had
been counseling the use of hardball tactics as a way to win votes.
Then Messrs. Sanders and Michaud arrived to shore up the Solís
agenda. That's when the free-trade side bounced back up in the polls.

The visit from the gringos seems to have widely insulted the Costa
Rican nation, not least because it doesn't appreciate U.S.
politicians meddling in its internal affairs. But there may have been
something else that angered the locals: Here were two protectionists
promising to leave the U.S. market open for Costa Rican goods even
after the death of Cafta. They smelled a rat.

Within days Costa Ricans learned just how protectionist these
"friends" of Mr. Solís are. Mr. Sanders always votes against free
trade and as recently as last year he and Mr. Reid voted against the
Caribbean Basin Trade Partnership Act which provides duty-free access
to the U.S. for Costa Rican textiles. Mr. Michaud's Web site boasts
of his opposition to Cafta in defense of Maine jobs. These notorious
protectionists would champion trade preferences or a new FTA for
Costa Rica after Cafta? That was perceived as an insult to Costa
Rican intelligence. One local politician called them "wolves in
sheep's clothing."

The fact is that CBTPA expires in September 2008 and the Caribbean
Basin Initiative can be terminated by the president if beneficiaries
don't make an effort to liberalize. Moreover, protectionist sentiment
is growing on Capitol Hill and trade preferences for countries that
refuse to open their own markets are coming under scrutiny. Both Sen.
Charles Grassley (R., Iowa) Sen. Max Baucus (D., Mont.) have
suggested they might not continue. In other words, if Costa Rica
rejects Cafta, it should be prepared to lose its preferential U.S
market access. That's a price that even Mr. Solís's followers may not
be prepared to pay, which is why he invited his friends down from

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