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These stories were pubished Tuesday, June 29, 2004, in Vol. 4, No. 127
Jo Stuart
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Free trade environmental and labor standards rejected
Kerry vows to strengthen Latin American ties
Special to A.M. Costa Rica

WASHINGTON, D.C. — Sen. John Kerry of Massachusetts, the Democratic Party's presumptive nominee for president, says that, if elected, he would strengthen U.S. economic and political ties with Latin America and work to forge a "community of the Americas."

In remarks Saturday to the National Association of Latino Elected Officials, Kerry said that developments in the Western Hemisphere have a profound effect on the United States and shape issues ranging from jobs to health care, from immigration to schools.

"In the Americas, foreign policy and domestic policy blur into one," he said. "It is fair to say that nearly every corner of the United States feels the effects of our relations with our neighbors." The speech was his first major policy statement on Latin America.

If elected president, Kerry vowed that he would work to strengthen U.S. political and economic ties with Latin America — in part by revising labor and environmental provisions in U.S. trade negotiations with Central America, and in talks to create a proposed Free Trade Area of the Americas. Kerry has said he wants to renegotiate the free trade pact.

Kerry said he also would seek to build on the spirit of the Summit of the Americas process to forge a "community of the Americas."

He explained that neighbors would look after neighbors in the community he envisions, with each nation recognizing that all of them have stakes in the others' future.

Kerry said that the defense of democracy and the rule of law would be at the core of this community.

"Strong democratic states with transparent rules and a broad respect for the rule of law are essential to alleviating poverty and inequality in the region," he said. "As president, I will strongly support democratic institutions, assist democracy where it is troubled, and promote democracy in Cuba."

In pursuit of these ends, Kerry said, he would create a "Council for Democracy" with distinguished international leaders who would work with the Organization of American States 

Sharon Farmer/Kerry Campaign
John Kerry greets members of a Little League team in Colombus, Ohio.

to resolve crises. He also indicated that he 
would triple funding for the National Endowment for Democracy's programs that strengthen democracy in the Americas and support the Social Investment and Development Fund for the Americas — a $500 million fund intended to promote public and private partnerships in the region.

Kerry said that he would also create a "North American Security Perimeter" if elected president. The purpose of this perimeter, he said, would be "to better facilitate the legitimate travel of law-abiding citizens and crack down on bad actors trying to enter the United States."

"By working closely with our border neighbors to coordinate our customs, immigration and law enforcement policies, we can better protect the region from terrorist threats," he argued.

To help win the hearts and minds of a generation of leaders in Latin America, Kerry said, he would triple the number of educational exchanges and encourage colleges to give tuition waivers to foreign students in exchange for internships overseas for U.S. students.

"The Community of Americas is about working together toward shared goals," Kerry concluded. "In the war on terror, in the war on poverty, in the war on drug smuggling, in our many common battles, we must look to our neighbors as partners, not as second-class citizens. . . . "

Martin manages to hold on in Canadian voting
Special to A.M. Costa Rica

OTTAWA, Canada — The party of Prime Minister Paul Martin did better than expected in Canadian national elections Monday, but the country is still left with a minority government.

Liberals won 135 of 308 seats. Conservatives took 98 and the Bloc Quebecois took 54. For a majority in the parliament, 155 seats are required. 

The Province of Ontario provided the edge for the Liberal Party, which won 72 seats there compared to the Conservatives’ 18.

The New Democrats Party won 20 seats and is likely to enter into a governing alliance with Martin’s party. The Green Party failed to win a seat.

Four of Martin’s ministers failed to be re-elected to seats in the House of Commons.

Martin took over the nation's top job from former Prime Minister Jean Chretien in December.

Polls showed a tight race, but the use of polling techniques in parliamentary elections can be misleading. Instead of trying to predict the outcome of one race, pollsters must predict the outcome of 308 separate races.

Analysts agreed that the campaign was unusually negative. 

The conservative Party focused its campaign on alleged financial mismanagement by Martin’s government in placing money in advertising agencies friendly to his party.

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Travelers face problems
due to controller strike

By the A.M. Costa Rica staff

Although the official word is that the strike by air traffic controllers has had little effect on travel, readers report problems.

Although air traffic seems to be moving smoothly at Juan Santamaría Airport, some passengers coming from outside Costa Rica report their flights have been canceled.

One reader said that American Airlines flights from Miami to San José  were canceled Saturday and that he arrived several hours late Sunday after overnighting in Miami.

Officials insisted again Monday that the group of some 29 foreign air traffic controllers was sufficient. Some 89 Costa Rican controllers walked out Saturday morning in a pay dispute.

The government said Monday that the strike was illegal and that officials would go to court to press their case. Controllers have broken off negotiations with the government.

Ovid Pacheco, minister of Trabajo, said during a press conference Monday afternoon that the Código de Trabajo or national work rules brands any strike by employees in public transportation to be illegal.

Officials said that four steps have been taken since Saturday to insure safety.

Greater distances are being maintained between aircraft in the air. Controllers are being rotated so they do not suffer fatigue. More controllers are being asked to come to Costa Rica and work. And an international aviation organization has been asked to send a representative to verify that operational security is maintained.

In addition to the Alajuela airport, the nation’s largest, controllers also guide flights from Tobias Bolaños in Pavas and Daniel Oduber in Liberia. There also is a flight control center that handles traffic in the nation’s skies.

During the press conference, Ricardo Toledo said that striking controllers will not be paid for the time they are out.

He asked controllers to return to work so that there is no doubt about the aviation security of the country. Officials also noted that July 1 starts another important period of tourism for the country. This is when North Americans and some Europeans are on vacation. The period runs through the end of August.

Tourism generates $1.2 billion a year, so officials are anxious to give the impression that air travel is without problems.

However, the striking controllers have been critical of the work of their replacements and have recorded exchanges between controllers and aircraft. They contend that the situation is not as normal as the government would have people believe.

Disabled get service
via telephone again

By the A.M. Costa Rica staff

The government and the Instituto Costarricense de Electricidad, ICE, have relaunched the 137 service for persons with vision and hearing problems.

In doing so, both agencies were conforming to laws that provide equal access to citizens.

President Abel Pacheco estimated that some 100,000 persons will benefit by the new service.

ICE, which runs the telephone service, said that it would purchase some 60 TDD or TTY devices for the disabled and distribute them. The cost of some 135,000 to 150,000 colons (about $310  to $344) would be collected from the users over 10 months.

The devices, which have keyboards and video screens allow the reception of written messages in lieu of voice.

ICE said the service would function all over the country from 5 a.m. to midnight and that the use of the service would be free. For international calls, some operators will be bilingual, the telephone company said.

Club announces winners

By the A.M. Costa Rica staff

Bryan Kerr, an Escazú dry cleaning operator, was the winner of the top prize in the Canada Day raffle presented by the Canada Club Sunday. He won a free air trip via Continental to any place he would like to go in Canada.

The club also said that Rob Potuzak was the second place winner, getting a troy ounce of gold.

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Supreme Court decison on detainees is mixed one
By the A.M. Costa Rica wire services

The U.S. Supreme Court has delivered a mixed decision on the status of people detained in the war on terrorism. The high court ruled Monday that the U.S. government has the authority to apprehend and indefinitely detain people, but added that they may legally challenge their detention. 

In a pair of decisions in related cases, the Supreme Court said foreign-born and American detainees have the right to challenge their detention in U.S. courts. 

The court did not rule on the legality of the detentions themselves, thus leaving the U.S. government with the wide latitude to hold terror suspects without trial. 

The decisions came in the cases brought on behalf of the 600 or so men arrested in Afghanistan and elsewhere overseas and held at the U.S. base at Guantanamo Bay, Cuba, and two U.S. citizens arrested and held in the United States. 

U.S. troops have detained hundreds of people, mostly in Afghanistan, as suspected terrorists. The government has labeled them "enemy combatants" and claimed they can be detained indefinitely. In cases brought to the Supreme Court, government lawyers argued that the detainees are out of U.S. legal jurisdiction because they are held on a U.S. base in Cuba. 

The Supreme Court rejected that position, saying the detainees have the right to be heard in U.S. courts. 

Harold Koh, dean of the Yale University Law School, says the Iraqi prison scandal, in which U.S. soldiers are accused of abusing detainees, affected the court's decision. "I think the government was saying up until then 'you can trust us, we can protect the rights of individuals, even if Congress and the courts don't participate at all.' And I think what the court's saying today is, 'forget that,'" he said. 

Legal scholars were divided about the effect of the court's rulings on the Administration's bid to indefinitely detain terrorism suspects. David Rivkin, a former legal counsel in administrations of Ronald Reagan and the first President Bush, notes that the government's power to detain suspects as "enemy combatants" was upheld. 

"The Supreme Court held that the government is entitled to hold even American citizens as enemy combatants and does not have to treat them as criminal suspects. And that is a huge victory for the government," said Mr. Rivkin. 

But Steven Shapiro, legal counsel of the American Civil Liberties Union, which has opposed the detentions as unconstitutional, says the Administration has suffered a major legal defeat. 

"This is an administration that has deliberately designed its war on terrorism in an effort to place it beyond judicial review and outside the rule of law. The court today rejected that position clearly and overwhelmingly," he said. 

Legal analysts say the court decision is vague on whether it applies only to Guantanamo.

Lawmakers just wish Alex Solís would go away
By the A.M. Costa Rica staff

The members of the Asamblea Nacional just wish that Alex Solís would go away.

The man who was named contralor general de la República just two weeks ago has become a liability and an embarrassment for legislators.

Alex Solís seems to have been in the habit of playing fast and loose with rules governing notaries. He admitted on television a week ago that he signed his brother’s name to a legal document and then authenticated the signature.

As a result, the legislature formed a committee to investigator him, but then the bad news just would not stop. Solís was revealed to be a money broker who loaned cash to many of his neighbors in southern Costa Rica when they wanted to illegally travel to the United States to work.

The committee was making plans Monday to bring the associates of Solís to testify. This included some of those involved in the high-interest lending business. Also expected to be called is Ottón Solís, the brother of Alex who is a former presidential candidate and leader of Partido Acción Cuidadana.

At first the allegations raised by Humberto Arce in the legislature were dismissed as mere politicking. Arce has broken with the party. He was in the minority when Alex Solís was elected as part of a deal among the two major parties.

But as the allegations multiplied, lawmakers began paying more attention, as did the public. Perhaps the most damaging allegations was that Solís would take the houses and properties of his neighbors when they could not pay back the money they borrowed at 3 percent a month interest.

The post of contralor general is that of financial watchdog for the country. It is a job filled by the legislature. 

In effect, the job is the policeman of contracts and business deals for the government. All significant contracts require the approval of that office.

The current scandal seems to have eroded any moral high ground that reformist Ottón Solís held. He is a likely presidential candidate in 2006.

Lawmakers and others who watch politics here believe that serious damage has been dealt to the party with which Ottón Solís is closely identified.

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Fed widely believed to be ready to hike rate
By the A.M. Cosa Rica wire services

The U.S. central bank, the Federal Reserve, will announce Wednesday the result of its latest deliberations on short-term interest rates. It is widely expected that the Fed, for the first time in four years, will lift rates from their current 40-year low. 

The overnight fed funds rate, an interest rate controlled by the central bank, stands at 1 percent, its lowest level since 1958. Between 2000 and 2003 the central bank aggressively stimulated economic activity by reducing the fed funds rate 11 times, steadily bringing it down from 6.5 percent. 

Today's economic environment is quite different. Business activity is vibrant. Economic growth exceeds 3.5 percent. And long dormant inflation is again on the rise. That's why analysts are convinced that the Federal Reserve will end the stimulus of cheap money and gradually bring monetary policy back to neutral. 

Scott Brown, a money manager at Raymond James brokerage in St. Petersburg, Fla., said that he expects several rate increases over the next few months. 

"Yes, I think several 25 basis point [1/4 percent] rises at each Federal Reserve policy-making meeting [roughly every six weeks] well into 2005 are likely," he said. "You know to get to a neutral fed funds rate [a rate just above the inflation rate] you have to get to 3.5 to 4 percent. We're at 1 percent now. So if they're doing [only] 25 basis points per meeting, you're looking at a very lengthy process." 

So, why should it matter if interest rates rise? The 

answer is that millions of Americans are in debt for everything from the home mortgages they are financing to automobiles and consumer goods. Much of that debt is at variable interest rates, meaning that as rates rise so do debt payments. 

Experts say rising debt payments, when combined with already higher energy prices, could slow economic activity and depress consumer confidence. In addition some sectors of the economy, like home construction, are very sensitive to interest rates. Rising rates could end the boom in the housing market. 

Todd Salamone, an analyst at Schaeffer Investments in Cincinnati, Ohio, said that the U.S. economy may not be as solid as some experts assume.

"Obviously there is a geopolitical risk out there [Iraq, terrorism]. There is an inflationary risk out there. And yet what we're concerned with is the complacency that we see in regard to those risks," he said. "It seems that whenever we're reading newspaper articles, what have you, Wall Street is taking the angle that everything is fine. But when you look at studies, when the Fed enters a process of rising interest rates, the stock market does under-perform relative to its norm." 

The stock market, four years after the bursting of the high-tech bubble that had taken prices to record highs, fell precipitously in 2001 and 2002, rebounded in 2003. This year it has been steady. 

What effect is a rate increase likely to have on the economy? Recent experience gives a mixed answer. In both 1994 and 2000 the Federal Reserve raised short-term interest rates several times. In 1994 and 95 the economy performed well. In 2001, however, it slipped into recession. 

Agreement designed to protect food in Americas
Special to A.M. Costa Rica

WASHINGTON, D.C. — The U.S. Department of Agriculture has signed an agreement with a health agency of the United Nations to improve the protection of food in the Americas.

In a statement, the Pan American Health Organization said its agreement with the agriculture department calls for improving protection in the Americas of the "food supply and animal agriculture from intentional and accidental introduction of harmful substances and exotic disease."

In addition, the agreement calls for promoting the trade of safe food in the Western Hemisphere, increasing interchanges of scientists and government food safety officials and promoting the sharing of resources.

Also, the agreement says that by establishing the Free Trade Area of the Americas in January 2005, the Western Hemisphere will become the largest trading bloc in the world. The agreement says that along with the "effects of constant global movement," the new trade agreement will result in the need for increased cooperation between the Pan American and U.S. agencies.

"The international exchange of people, food, animals, and agricultural products brings with it increased challenges to public health, animal health, and economic growth," the agreement says.

Other essential parts of the agreement, which takes effect immediately and covers a period of three years, include promoting greater participation of countries with small- and medium-sized economies in the international "standard-setting processes," and enhancing "program coordination." 

Jo Stuart
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