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(506) 223-1327           Published Tuesday, June 5, 2007, in Vol. 7, No. 110            E-mail us    
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Finally, a guide to the real business vocabulary
By the A.M. Costa Rica staff

With more foreign companies coming here and more North Americans setting up small businesses, a brief review of important Costa Rican business phrases is in order:

1. "You don't need any more approvals or permits on this project."

Do not be surprised if the final, absolute, definite approval isn't. There always is another agency or permit that's needed.

Don't feel abused. Even the president faces this problem. Óscar Arias Sánchez thought that with a slim two-thirds majority in the Asamblea Legislativa he could get the free trade treaty ratified. Wrong!

He, too, was blindsided. It was the Tribunal Supreme de Elecciones that said a public referendum must be held, despite the Costa Rican Constitution giving full authority for approving foreign treaties to lawmakers.

But even the tribunal and its proposed Sept. 23 referendum date were blindsided by an appeal to the Sala IV constitutional court, which is now studying the document.

So a small contractor should not feel singled out if the local municipality comes up with a truckload of more hoops to jump through or more permits to seek via administrative procedures or tramites.

2. "You contract is as good as gold!"

You thought the deal was a firm one, but he thought it was an invitation for further negotiations. Anyone who deals in business here knows that contracts are basically suggestions because there are few mechanisms to cheaply enforce one. No one wants to go to court for five years over a few thousand dollars.

But the poor expat with the rubber contract is in good company. Alterra Partners, the consortium managing Juan Santamaría airport, has been fighting the civil aviation authorities for four years over its agreement. The country will learn today if the Costa Rican government will boot out the private firm and take over the airport. (Story is HERE!)

Harken Energy thought it had the right to explore for oil off the Caribbean coast. It said it invested $11 million. But environmental protests and an unfavorable court ruling caused the company to cancel the project. Now it is threatening Costa Rica with a $57 billion demand in international arbitration.

The Harken case was handled by the Abel Pacheco administration. It was President Pacheco who changed the rules and announced he was issuing a moratorium on open pit gold mines even as two were in the development stage. One near Puntarenas is now producing, but the Las Crucitas mine in northern Costa Rica still is controversial and has faced a multitude of legal challenges.

Then there is the San José-Caldera highway, 20 years in the building and not yet open. The roadway will be completed by a concessionaire who will receive money over an extended period to compensate for the construction work.
flooded by bureaucracy
Costa Rica says it has no money for major projects, and the Arias government looks to concessions to get important works done. So many eyes are on Alterra, Harken and Las Crucitas.

Indeed, one of the fears among some sectors of the economy is that the proposed free trade treaty will expose the country to many more international arbitration cases.

3. "It's not my fault!"

This could be the national slogan of the bureaucrat. From national banks to public agencies the rules are firm and you just can't do what you plan, no matter what it is. Want to see the boss and get a straight answer? Good luck. But it's not this guy's fault.

4. "Your signature does not match!"

National bank tellers suddenly become handwriting analysts when they do not want to reveal something. Although criminologists take weeks to validate handwriting, the local bank teller can do it in an instant. Usually this means you look like a crook, there is no money in the cash box or that the teller doesn't want to take a chance that you are who you say you are.

Other agencies like Radiographica Costarricense S.A. and the Instituto Costarricense de Electricidad also use this trick to stop a tramite cold.

5. "Your cédula is expired!"

The critical piece of paperwork for doing personal or commercial business here is the cédula de residencia or the carnet for pensionados and rentistas. Without these, you do not exist, and they have to be up to date.

These documents are issued by Dirección General de Migración y Extranjería. But don't hold your breath. They are a bit behind. A lawyer who went there seeking an interview for a pensionado application Friday was given an August appointment date. August of 2008. That's about 15 months. Meanwhile, it's a cash economy.

6. "You have to pay more because you have more money than me!"

Finally it boils down to this, a personal international aid program that some Costa Ricans practice. It is the modern equivalent of Robin Hood. In almost every financial transaction, many Costa Ricans go for the last possible colon because he or she really and truly believes that North Americans are fabulously wealthy and will not miss a tiny bit.

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San José, Costa Rica, Tuesday, June 5, 2007, Vol. 7, No. 110

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Sixth grader dies on bus
after putting head outside

By the A.M. Costa Rica staff

An Alajuela sixth grader stuck his head out the window of a public bus Monday afternoon not knowing the bus was near a guide wire for a utility pole. The boy, 11, died as his classmates on the sidewalk watched when the bus pulled away into traffic and he hit the steel wire.

Dead is Carlos Andrés Herrera, a student at the Escuela España in San Antonio de Belén where the tragedy took place. He was on his way home to San Rafael de Alajuela on the Alajuela-San Rafael bus.

Young Herrera was seated in the right rear seat and put his head out the window on that side. Some 25 of his schoolmates also were on the bus, which stopped short when the driver realized there had been an accident. The driver was treated for shock.

Morning commute from west
will face damaged highway

By the A.M. Costa Rica staff

The morning commute to San José from the west will be a slow one today.

Water burst through a retaining wall and smashed into the Autopista General Cañas Monday and ripped the pavement from at least two of the three eastbound lanes.

The afternoon event followed a heavy, local downpour and led to a monumental traffic jam.

The location is about a kilometer (.6 of a mile) east of the highway's only toll plaza. Highway workers managed to open one of the lanes quickly. A second lane was opened later in the evening, but vehicles found the going difficult because of the layer of mud.

The water flowed down a hill alongside the highway as if it were a waterfall. Also damaged was the shoulder of the road.

Highway supervisors said that the three lanes should be open in about two days, but it might take some time to replace the missing pavement.

The damage to the highway is the most public incident so far this rainy season. Homes were damaged in Desamparados last week. Another home suffered damage Saturday at Linda Vista de Río Azul, and near San Carlos some 100 persons were routed from their homes Monday by flooding.

The heavy rain was very localized, and some sections of the Central Valley received none.

No arrests made so far
in Playa Herradura death

By the A.M. Costa Rica staff

There have been no arrests so far in the death of the Colombian woman tourist who jumped from a moving car in Playa Herradura.

The death took place late Saturday after two gunmen broke up a beach party.

The victim, Rubí Flores and her friend, Cristina Marín, had driven to the beach with two U.S. citizens, whom police identified as their boyfriends, also tourists.

The Fuerza Pública said that two other men arrived in a second car and pulled guns on the four persons. The intent appeared to be to steal the vehicle driven by the tourists. But the gunmen also decided to take the two women.

When the car took off both women, apparently fearing rape or worse, jumped from the vehicle, but Ms. Flores hit her head on a rock.

The two U.S. citizens were identified as Benjamín Van-Dyke Gulik and Janed Vincent Manchee by the Fuerza Pública in Jacó.

Costa Rica off watch list
of international labor unit

By the A.M. Costa Rica staff

The International Labor Organization has taken Costa Rica off the list of countries that do not comply with international labor standards.

The Unión Costarricense de Cámaras y Asociaciones de la Empresa Privada made this known Monday.

Certain labor unions have accused the government of preventing the unionization of public entities.

The international labor organization met last week in Switzerland and issued its annual list.  Rafael  Carrillo, president of the chamber here, said that Costa Rica received the support of all of Central America, Panamá and the Dominican Republic in being taken off the list.

Pirated disks confiscated

By the A.M. Costa Rica staff

Fuerza Pública officers confiscated 870 pirated CDs and DVDs with two arrests in Siquirres. The first arrest was of a man who carried 440 CDs and the second was of a woman who had 430 disks, said police. The disks were music and movies, they said.

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Regulatory agency seeks to put more flexibility in gas prices
By the A.M. Costa Rica staff

The agency that regulates prices, hit with an unfavorable Sala IV constitutional court decision, has proposed a change in the way the cost of petroleum is figured.

The agency is the Autoridad Reguladora de los Servicios Públicos. Employees of the public agency have been working overtime because the price of petroleum has been fluctuating, mostly upwards.

The constitutional court made all the work in vane last month when it decided that the system being used, a mathematical model, was faulty. The system covered all varieties of gasoline, liquid petroleum gas, diesel, aviation gasoline, jet fuel, kerosene and other forms of petroleum derivatives.

The pressure to change the price comes from the Refinadora Costarricense de Petróleo S. A., the government monopoly. Because Costa Rica does not produce petroleum, the country is dependent on the world price.

Under the proposal, the refinery will be able to change the price 10 percent in either direction during a given month
within limits set by the regulating agency. The agency  would fix new prices or validate the existing ones on the last Friday of each month, according to the plan announced Monday.

In cases of emergency or a spike in the world price, the refinery could go outside the 10 percent limit, but by doing so a hearing before the price regulator would be triggered with citizens having an opportunity to comment. Citizen comment was a major factor the constitutional court found lacking in the previous system that was more or less automatic depending on economic indexes.

During the last month the refinery complained that it is suffering losses because it could not raise prices because no mechanism existed for the regulatory agency to change the price, even though the world price continued to rise.

At the same time the regulatory agency said that it would begin the process to increase the price of petroleum products. Super gasoline is predicted to go from 588 colons a liter to 620, regular from 552 to 584 and diesel from 392 to 424. There are about 520 colons to the U.S. dollar. Other products will see similar increases when the price ruling is issued.

New U.N. study sets financial cost on child malnutrition here
Special to A.M. Costa Rica

Child malnutrition cost the economies of Central America and the Dominican Republic almost $7 billion — or 6.4 per cent of the region’s gross domestic product — in 2004, according to a new joint study by two United Nations agencies released Monday.

The study, carried out by the U.N. World Food Programme and the U.N. Economic Commission for Latin America and the Caribbean, calculated the effects of hunger and undernutrition on health, education and productivity.

The study estimated the costs, including increased health care and education needs as well as a dip in economic activity due to lower productivity, borne by the region as a result.

The study, the first of its kind in the region, found that 90 per cent of economic losses are caused by higher mortality rates owing to hunger-related illnesses and lower educational levels.

“This study is a wake up call to the international community that widespread child hunger is not only a moral and humanitarian issue, but it has economic consequences as well,” said Josette Sheeran director of the World Food Programme. “Clearly, we will not be able to eradicate poverty in the region or in the world for that matter, until we take effective steps to tackle hunger and malnutrition.”

In the region as a whole, there are 880,000 children who
are underweight, or approximately 14 per cent of children under the age of 5, said the study.

“Undernutrition has very serious long-term costs, which are not limited to an individual’s life-cycle given the impact on intrauterine growth during pregnancy of malnourished women,” said Jose Luis Machinea, Economic Commission executive secretary. “This cycle will more probably be repeated in their offspring and poverty will be perpetuated generation after generation if we don’t act to remedy the situation.”

The study also noted that current governments are not to blame for the current levels of undernutrition in children, but rather decades of inaction are.

“We know that the Latin American region produces three times the amount of food needed to feed its population,” said Pedro Medrano World Food Programme regional director. “This means there are grounds for hope, and an opportunity for governments and society to help children under age 5 to break the vicious cycle of poverty and hunger.”

In 2006 the food program distributed food aid to more than 5.6 million people in 10 countries in the Latin American and the Caribbean region, including almost two million children in Food-for Education schemes and more than 850,000 mothers and children in nutrition programs.

The study’s findings will be presented today at a parallel event during the Organization of American States General Assembly in Panamá.

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Secretary Rice and Venezuelan minister clash over RCTV
By the A.M. Costa Rica wire services

U.S. Secretary of State Condoleezza Rice and the Venezuelan foreign minister clashed at the meeting of hemispheric leaders in Panamá Monday.

A reporter said that Ms Rice finally led a walkout of the U.S. delegation when the foreign minister, Nicolas Maduro  continued his criticism.

Ms. Rice expressed concern about press freedom in Venezuela after the closing of the nation's largest private television station. She asked leaders of the Organization of American States to send a team to Venezuela to study the situation.

The theme of the annual general assembly of the 34 nations is boosting the reliability of energy supplies, and developing new sources of energy in the future.

In opening comments to delegates, Rice voiced concerns about press freedom in Venezuela, where officials failed to renew the broadcasting license of Radio Caracas Television. The government's decision to end broadcasts by the nation's largest private television station has sparked condemnation by the international community and street protests at home.

Rice said the role of the media is crucial to the proper functioning of any democratic government.

"Disagreeing with your government is not unpatriotic and it most surely should not be a crime in any country, especially in a democracy," said Ms. Rice.

Ms. Rice asked Jose Miguel Insulza, the organization's secretary general, to send a team to Venezuela to consult with the government and opposition leaders about the decision to shut down the opposition-linked RCTV.
Venezuela's Foreign Minister Nicolas Maduro rejected Rice's statement with a cold stare. Maduro said Secretary Rice's comments were an unacceptable attempt to interfere in the internal affairs of a democratic country like Venezuela. He also said she was deviating from the theme of their meeting.

Maduro used his speech to the assembly to unleash an attack against the United States for alleged human rights abuses against terrorism suspects, illegal immigrants from Latin America and others. He also denounced what he called new efforts by the U.S. government to destabilize the administration of Venezuelan President Hugo Chavez.

In an unusual move, Rice asked for an opportunity to respond to Maduro's claims. She pointed to the example set by U.S. television and other media outlets, where she said there is open debate and criticism of U.S. policies.

"In a democracy, the citizens of a country should have the assurance that the policies of their government will be held up to criticism by a free and independent press without the interference of their government," she said. When Maduro had his turn, Ms. Rice and other members of the U.S. delegation left, said the reporter.

Panamanian journalists organized a series of protests Monday to voice their opposition to the Venezuelan decision against RCTV. More than 20 television and radio stations interrupted their news programs with 30 seconds of silence to show solidarity for employees of RCTV, and seven newspapers published full-page advertisements sponsored by Panama's National Council of Journalists.

Outside the site of the organization's general assembly, a group of Panamanian journalists waved banners saying President Chavez will not succeed in silencing the Venezuelan people.

Another financial chapter plays out today in the continuing airport drama
By the A.M. Costa Rica staff

The country's civil aviation authority has to decide today if it will turn its back on the privatization of Juan Santamaría airport, the private arm of the World Bank and a possible loan of $48 million to continue improvements there.

This is the climax of a four-year battle between Alterra Partners, the consortium chosen to run and improve the airport, and the Consejo Técnico de Aviación Civil.

Alterra entered into an agreement with the government in 2000, and negotiated a $160 million loan with private, foreign sources. The road has been hard for Alterra, and the government keeps leveling fines for its failures to meet construction deadlines.

The loans are under the umbrella of The International Finance Corp., the private sector arm of the World Bank Group. The organization provides loans, equity, structured finance and risk management products, and advisory services to build the private sector in developing countries, according to its self description. The International finance Corp. has from $235 to $40 million of its own money invested in the airport. The rest was channeled through it by other financing sources.
What the International Finance Group wanted was an extension of the Alterra contract and certain other concessions as well as a cap on fines. The proposal was rejected by the Contraloría de la República, and the ball was put back into the International Finance Corp.'s court.

The International Finance Corp. now says that it will not accept the deal as modified by Costa Rica. Among other things, Costa Rica wants Alterra to withdraw a $45 million court suit. The company complains that payments from the government have not been prompt and complete.

Agreement of all the parties is crucial for acceptances of a new loan of $48 million from the Central American Bank of Economic Integration. Alterra is building new departure lounges and plans to lengthen the runways at the airport, among other improvements.

The airport situation has high significance for the government of Óscar Arias Sánchez, which seeks to obtain improved infrastructure for the country by using the type of concession in force at the airport.  For example, the San José-Caldera highway, which will cut time from the capital to the Pacific coast by half, is supposed to be handled by a private firm that will collect tolls over the next 20 years. That deal has run into delays, too.

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