February 6, 2006

Costa Rica election gridlocked

By Chris Aspin and John McPhaul

SAN JOSE, Costa Rica (Reuters) - Battered by government
scandals, Costa Rica slid further into uncertainty on Monday
when a presidential election that could decide the future of a
trade deal with Washington was gridlocked.

Nobel Peace Prize winner Oscar Arias, a former president,
was tied with Otton Solis, and an electoral official said it
could take more than a week before a winner was declared.

With votes from 85 percent of polling centers counted in
Sunday's poll, social democrat Arias was at 40.6 percent.
Solis, who once worked for Arias as planning minister, had 40.2

Arias, winner of the Nobel Peace Prize in 1987 for efforts
to end civil wars in Central America, was bullish.

"If I win one more vote than him, I am president," he told

The country's best-known son, Arias, 65, appealed to Costa
Ricans angry at a series of corruption scandals.

But it was an unexpectedly strong performance by Solis, 51,
a technocrat and former central bank official who said it was
too early for claims of victory.

"I think it is a very delicate moment for the country and
we are going to wait until the end, until the electoral
tribunal has processed all the votes because with such a small
difference, anything can happen," he told Costa Rican

Any eventual winner needs more than 40 percent of the vote
to avoid a runoff on April 2.


An Arias victory would help U.S. President George W. Bush's
free trade plans in the region. Arias wants Costa Rica's
Congress to drop its opposition to the trade accord between the
United States and Central America, known as CAFTA.

Solis backs the plan mostly but wants to renegotiate it.
Costa Rica is the only signatory not to ratify the deal.

"If certain points in the trade deal, the ones we have
pointed out, are not changed we will vote against it," said
Solis, of the Citizen Action Party.

Solis says the accord favors Washington too much in the
agriculture and telecommunications sectors and the environment.

Costa Rica, long a haven of stability in a region torn by
civil conflict, poverty and crime, suffered a blow to its
self-image in 2004 when two ex-presidents were briefly arrested
on allegations of taking bribes from foreign companies.

A third former leader is refusing to return from Europe to
face questioning on similar charges.

Costa Rica has one of the highest inflation rates in Latin
America, at an annual rate of 14.1 percent in 2005. But planned
fiscal reforms have become stalled.

Investors are worried about stagnant government, Boris
Segura, emerging markets economist at Standish Mellon Asset
Management in New York.

"Costa Rica has had eight years without a government. We
have had two lost presidential terms," he said.

Arias did well in the election for Congress, also on
Sunday, which could help push the trade deal through but his
National Liberation Party looked like it would fall short of a
an absolute majority in the legislature.

Arias, the scion of a rich coffee family, ruled Costa Rica,
roughly the size of Vermont and New Hampshire combined, from
1986 to 1990 when the country stood out as a refuge of peace in
a region torn by conflict.

Leftists have won a string of recent elections in Latin
America but the left in Costa Rica is split into several
factions with virtually no chance of taking power.

(Additional reporting by Manuela Badawy in New York)