Brothers in arms.

Costa Rican President Abel Pacheco, 70, readily admits that he "knows nothing about the economy." Yet, since taking office in May 2002, his government has handled one of the country's most profound economic moments: negotiating a US$24 billion trade deal between Central America and the United States, known as the U.S.-Central American Free Trade Agreement (CAFTA). The largest of the Central American economies, Costa Rica nevertheless declined to sign the trade pact at the last minute, asking for more time to negotiate the opening of its state-owned telecom and insurance monopolies. In an exclusive interview with LATIN TRADE, Pacheco talks with Correspondent Tim Rogers about Costa Rica's role in the world.

Is the trade deal Costa Rica signed a month later beneficial to all Costa Ricans? What, in real terms, did you gain by making the United States wait?

Yes, I think it is beneficial f think that I managed to convince [the United States] that Costa Rica is a country with some peculiarities. There are things here that are extremely cherished, like the ICE, the Instituto Costarricense de Electricidad. For Costa Ricans, it means a lot. So we went back to talk more about how to treat the institution.

So is the agreement that Costa Rica signed better than the deal signed by the other four Central American countries?

I don't know if it's better or not. But I do know that it meets the needs of Costa Rica.

You have said many times that Costa Rica would not negotiate opening the electricity company in the framework of CAFTA, and now the treaty says that it must open by 2007. How do you explain the change in policy?

There's no change. If you look at my government's program, it speaks specifically of opening. What I have said is that ICE would not be privatized. It's not going to be privatized. But if opening means accommodating the historic changes that are occurring, we have to do it. Times change.

What is the difference between opening and privatization? Some have said that opening is the cheapest form of privatization.

These people have no idea what they are talking about. Establishing competition has nothing to do with selling something.

CAFTA has to be approved by the legislative assemblies of each Central American country in the treaty, and by the U.S. Congress. But some Costa Rican legislators have said they won't vote to ratify it. Will CAFTA die in the Costa Rican Congress?

It's a possibility. But, well, that's democracy and I am profoundly respectful of democracy. If the deputies decide not to sign it, I will respect the decision of the legislative assembly, although I believe that CAFTA would greatly benefit the country.

What measures did Costa Rica take to make the deal better than the North American Free Trade Agreement (NAFTA) between the United States, Mexico and Canada?

We're back to the same issue; I cannot judge if it's better or worse than any treaty already in force. What I can say is that it accommodates the peculiarities of Costa Rica, and thus I am satisfied. What will we learn from NAFTA? Time will tell. Comparing the development of this treaty with what happened with NAFTA, we shall see what advantages and disadvantages we have taken on.

In terms of free trade, what happens after CAFTA? Will Costa Rica continue on this path toward free-trade deals with other countries? If so, which ones?

It would appear to be a global trend. We are just about to close a treaty with the Caricom [Caribbean Community] countries. I am especially satisfied with this treaty, as I have always said that Costa Rica's policy is to be with our Caribbean brothers. I believe that the Caribbean should act as a region. I think we would be a tremendous political force; we are more than 20 votes in the Caribbean area. After that, we are beginning a dialogue with Europe. We have had an open dialogue with Panama for some time now. That appears to have advanced considerably.

What is the outlook for the Costa Rica economy?

I see Costa Rica's role in the world as very important. I am very optimistic. The last few years have shown that Costa Rica can play with the big countries and really can be the first Latin American country to over come underdevelopment. We think we're capable of this. We have to be sure that Costa Rica continues to be a democracy; that it continues to be a country of legal certainty; that it is a country free of corruption. With that, we, with the social peace we guarantee, will win in such a competitive world.

Other Central American countries, like Nicaragua, are making a major effort to increase tourism. Costa Rica has the advantage of better infrastructure and a better international image, but do you believe that the sector can grow more, or has it reached a plateau?

We are going to grow much more. And we are sharing our tourists with our neighbors in Central America. Via our airport in Liberia [in Guanacaste province], we are making it easier for tourists to visit Nicaragua. There area a lot of trips to take and we are about to have flights between Liberia and Granada to promote this kind of intra-regional tourism. We think that it behooves us to share with Nicaragua our success [and] that we should share, as we are brother countries. Nicaragua has many beautiful places to visit and this makes Costa Rica more attractive, because it's two countries in one.

In the last 10 years, Costa Rica has begun an interesting transformation from an agricultural economy to a more technological economy. Do you believe that this is the beginning of a drastic change in the focus of the national economy?

Ten years ago we lived on four export products: Sugar, beef, coffee and bananas. Today Costa Rica exports more than 3,000 products to the world, competing in the most demanding markets with high quality offerings, from software to highly sophisticated medical equipment.

Other Central American countries have criticized Costa Rica as an obstacle to regional integration. What is Costa Rica's role?

Well, we have to be a region. I have no fear of economic or commercial integration. Remember that I am the first Costa Rican president to visit Parlacen [the Central American Parliament]. And on my visit to Parlacen, soon after taking office, I said precisely what my colleagues are now saying. The things that I said had to be done, thank God, appear to have been done. Costa Rica's policy is to establish a forum, not just Central American but including the Caribbean, in order to discuss the region's problems so that we can defend ourselves as a region regarding international problems. But it should be an honorable forum, and not one attached to what has happened at Parlacen, which has seen some regrettable events.

How goes the process of integrating Central America's customs agents?

It's going well but it's difficult and will take time. It is not easy to integrate five countries that, although similar in appearance because of our history and geography, are very different in a series of ways. It is hard to integrate the interests of so many groups but, nevertheless, we think we can do it.

What are the biggest obstacles to integration?

Well, there are interest groups that have their place and exist in every nation. Each one is defending its own interests. It's logical that this happens. We are overcoming that bit by bit to create formulas that benefit everyone.

In terms of bilateral relations between Costa Rica and Nicaragua, there's some tension over migration. How do you see the issue?

For the first time in Central America, all of the presidents are democratically elected, and all of the presidents are very good personal friends. So all of the problems that there were during the times of dictatorship have been overcome. I personally have a warm friendship with the President [Enrique] Bolanos of Nicaragua. I have visited Nicaragua and the people know that my desire is that we rise out of underdevelopment, and they know that with deeds, not words, we have shown our interest in helping Nicaragua.

In a world worried about terrorism and war, what should be the role of a pacifist, democratic country with no standing army, such as Costa Rica?

Well, Costa Rica has a very idiosyncratic philosophy. We believe not only in country but also in finding our way out of underdevelopment. And we believe that development is the first step in the fight against terrorism. We believe that hungry and misery generate hate, and that hate generates terrorism. So we believe that one should help, and that the big countries are obliged to give poor countries a hand so that the world tomorrow can be a happy, developed world. We think that free trade is not just an end for business but also an end for health, education in culture, in art and everything that it is to be human.