Arias leads divided Costa Rica 20 years later

By John McPhaul

SAN JOSE, Costa Rica (Reuters) – Twenty years after first
taking office, Nobel laureate Oscar Arias was sworn in again as
Costa Rica’s president on Monday in a nation divided over free
trade with the United States.

Arias, who won re-election in February by a razor-thin
margin, backs the U.S.-Central American Free Trade Agreement,
or CAFTA, which Costa Rica’s Congress has opposed.

Costa Rica is the only signatory not to ratify the pact, an
important element of Washington’s influence in Latin America,
where leftist leaders have increasingly challenged U.S.
policies.

Arias said the Central American country of 4 million people
should embrace free trade and not cut itself off from the
outside world.

“Taking Costa Rica to isolation from great movements in the
world is a reactionary cause and a betrayal of the country’s
youth,” he said in his inaugural address before dignitaries
like former Polish President Lech Walesa, another Nobel Peace
Prize winner, and U.S. first lady Laura Bush.

Many Costa Ricans fear the trade pact would put their
country at a disadvantage against cheaper U.S. agricultural
imports.

Arias, 65, served as president from 1986-1990 when Central
America was torn apart by civil wars. He won the Nobel Prize in
1987 for his role in brokering an end to the conflicts.

This time around, he lacks a clear mandate after his
unexpectedly close win over Otton Solis, a CAFTA opponent.

Arias, who was initially expected to win the February 2
race by a landslide, instead squeaked out a 1.12 percent
victory.

That has left him without a legislative majority, and he
must cut deals with other parties to pass the trade pact. The
Supreme Court has yet to decide whether a simple majority or a
two-thirds vote is needed to pass CAFTA.

Arias vowed to clean up Costa Rican politics after a series
of corruption scandals involving former presidents.

“From today, there will be a clear and inalterable path
route when it comes to honesty in public functions,” he said,
speaking in the half-empty national stadium.

Outside, several hundred demonstrators marched in
opposition to Arias, who critics say has become too close to
business interests over the years.

“It will be four years of social exclusion,” said protester
Rodrigo Chavarri, a telecommunications employee. “We already
know about the free-market philosophy of Oscar and his team.”

Arias says he will use his worldwide acclaim as a Nobel
laureate to attract investment. He also wants to shrink
government and reach economic growth of 6 or 7 percent,
compared with around 4 percent last year.

Passing badly needed fiscal reforms is seen as another
major test, and Arias has pledged to push a tax reform bill to
force wealthier Costa Ricans to pay more for infrastructure.

(Additional reporting by Brian Harris)